EOH Holdings has warned of tough trading conditions in a statement to shareholders coinciding with the end of the first six months of its 2024 financial year.
Describing the operating environment in South Africa as “challenging”, in part because of high interest rates which are putting consumers, companies and government under “extreme pressure”, EOH said it has taken a “conservative approach to cash management”.
“The challenging economic environment continues to have an impact on clients’ IT budgets and investment planning,” it said. “Certain sectors are more constrained, notably the government, state-owned enterprises and municipalities, as well as large corporate IT investments being delayed or spread out over longer periods.”
Despite this, EOH is expected to keep its gross margins stable compared to the 2023 financial year. The net cash balance is largely unchanged at R232-million.
“EOH is on track to deliver administration cost savings of over R50-million on an annualised basis during the 2024 financial year, ensuring the group remains agile in the challenging trading environment.”
EOH said that as part of a restructuring, and amid a decision to become more an investment holding company, it has signed “long-term commitments” with the CEOs of each of its operating divisions. The head office is made up of about 40 people, who are responsible for governance, financial reporting, investor relations and other specialised services.
On the outlook for the second six months of the year, EOH said the upcoming national election “may cause uncertainty”, especially in the public sector. “As a result, we do not anticipate any material improvement in the next six months.
Van Coller’s exit
“The stronger balance sheet and more efficient cost structure allow EOH to navigate these conditions more effectively than in the past as well as pursue growth opportunities where they exist, primarily in the local and international digital enablement businesses.”
Read: How did Stephen van Coller really do as EOH CEO?
The interim results for the six months ended 31 January 2024, which are expected in March, will be the last set of financials delivered by Stephen van Coller, who has announced his intention to step down on 31 March. – © 2024 NewsCentral Media
