Mustek has turned in a 26,3% improvement in headline earnings in the six months ended December 2014 on the back of a 24,6% increase in revenue to R2,5bn, from R2bn previously. Basic headline earnings climbed by 28,5%.
Growth came from Mustek’s Huawei business, its Microsoft volume licensing offering and from its Rectron Australia subsidiary.
Although Rectron Australia continues to lose money — R2,6m in the latest six-month period — the losses have been reduced substantially. Revenue grew to R141,3m, from R30,9m in the 2013 interim period. “We expect further improvement to June 2015,” Mustek said.
It said a more conservative foreign exchange hedging policy is working well in light of the sharp depreciation of the value of the rand in the second half of 2014. Despite the weaker exchange rate, inventory was down compared to June 2014.
Looking ahead to 2015, Mustek said it expects “further revenue and profit traction” from its Microsoft volume licensing business, from Huawei Enterprise Solutions and from closed-circuit television surveillance and cabling products and services.
“Recognising that desktop unit sales are not showing high growth, we can push our strong variety of entry-level, mid-level and aspirational tablets,” it said on the state of the PC market. It added, however, that the upcoming release of Microsoft Windows 10 should spur a refresh of technology among businesses.
“Big data” and the “Internet of things” are also focus areas, as is IT in education. “Mustek has, over the last few years, been investing substantially in this particular market vertical and we believe that we are well positioned to grow our market share in this sector over the next three to five years. The amount of interest shown by various provinces during the last few months is encouraging.”
During the reporting period, Mustek bought back 2m ordinary shares on the open market for R15,8m. The repurchase commenced on 24 November and continued on a day-to-day basis as market conditions allowed until 30 December.
“The repurchase of shares will continue to be considered by the board in conjunction with an evaluation of current and future funding requirements in the period to 30 June 2015.”
In line with its policy, no dividend was declared for the interim period. “Cash generated by the operations will be used to fund our growth and reduce our debt,” Mustek said.
The company’s share price was last quoted at R8,72/share, up by 0,2% on the session. The counter has added 58,2% in the past 12 months. — © 2015 NewsCentral Media
