Ellies Holdings reported a sharp turnaround in its fortunes in the six months to 31 October 2020, turning in headline earnings per share of 2.56c against a loss a year ago of 2.91c.
Revenue was up 1.9% to R656.7-million while profit after tax was R12.9-million, compared to a loss previously of R30.1-million, the group said on Friday.
Ellies is involved in a wide range of product areas, from solar installations to LED light solutions, inverters and electrical products, and signal distribution and satellite television solutions.
The good performance comes despite the economic pressures caused in the reporting period by the Covid-19 lockdown. A restructuring and migration of Ellies’ warehouse and distribution functions in Johannesburg helped with the turnaround.
“During the preceding two years, the group wrote off substantial amounts of inventory and it is pleasing to report that the inventory write-off for the first half of the 2021 financial year was negligible,” Ellies said. “This was attributable to the ongoing clean-up as well as the migration to a third-party logistics and warehousing provider.”
Ellies CEO Shaun Prithivirajh said: “Becoming more efficient has been a key pillar of our turnaround strategy. Historically, the company has been poor on inventory management and, as a result, our warehousing and distribution functions are now managed by a third-party warehousing and logistics provider. We have already seen significant improvements, and this is reflected in our current financials.”
However, market conditions continue to be tough and Ellies’ biggest revenue generator, the installation of satellite dishes, has “shown a declining trend over the past reporting periods”.
“During the lockdown restrictions, MultiChoice was an essential service provider and partnered with Ellies, which resulted in a surge in new subscriptions as people were homebound. New subscriptions have tapered off since restrictions were eased.”
Ellies’ manufacturing segment, meanwhile, posted a “significantly reduced” loss but continued to “underperform” due to the lack of urgency in South Africa’s broadcasting digital migration project and the continued under-recovery of fixed costs. — (c) 2020 NewsCentral Media