Mustek has reported an 18% improvement in revenue in the six months to end-December 2022, lifted by strong sales of alternative energy solutions – batteries, inverters and solar systems – as load shedding worsened during the reporting period.
Earnings, however, dipped on margin pressure caused in part by overstocking of notebook PCs, with this inventory reduced at lower margins than the norm. They also fell on higher finance costs associated with the increase in interest rates. Operating profit came in an R241.7-million, from R252.9-million in the same period a year ago, a decline of 4.4%. Headline earnings per share, a financial metric watched closely by South African investors, fell by 6.5%.
“The half year … was a time of exacerbated market challenges that included the current energy crisis, exchange rate volatility, surging global inflation and subdued consumer spending from the increase in interest rates,” Mustek said.
Sales of green energy solutions now make up at least 10% of the group’s revenue, said CEO Hein Engelbrecht in a call with investors and media on Thursday. Sales of green energy solutions more than doubled in the past year. Engelbrecht said Mustek is struggling to keep up with demand, and he expects the segment to continue to perform well given there is no end in sight to Eskom’s woes.
However, Mustek said the revenue growth was “across the board”, with the Mustek trading unit growing revenue by 15.3% and subsidiary Rectron growing its top line by 20.3%.
“This was mainly driven by the increased demand for green energy products, which the group diversified into a few years ago. The group’s IT training company, Mecer Inter-Ed continues to contribute meaningfully to the group’s revenue and profitability.”
Solar installation
Distribution, administrative and other operating expenses grew by 11.4%, with the need to burn diesel to combat load shedding contributing to this increase. Mustek is, however, deploying a massive solar system at its head office, which should reduce its diesel costs in future reporting periods.
During the current reporting period, Mustek continued buying back its own shares, acquiring 1.46 million shares for R21.9-million. The share buybacks will likely continue in the second half of the financial year. – © 2023 NewsCentral Media
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