Shares in Mustek fell by more than 10% on the JSE in intraday trading on Wednesday after the technology distributor warned of a steep decline in full-year earnings.
In a trading statement, Mustek said it expects to report a 70-80% decline in headline earnings per share for the period ended 30 June 2024 compared to last year’s figure of R3.75.
The earnings slump comes after the company reported a 58.8% decline in headline earnings per share in its first-half reporting period.
“The operating environment for the year ended 30 June 2024 was marked by tough economic conditions and cautious market sentiment leading up to the general elections in South Africa,” it told investors.
“Prevailing uncertainty froze corporate and government spending, and the unexpected abatement of load shedding abruptly ended the renewable energy boom, which fuelled our growth last year.”
It said reduced demand for green energy products put Mustek in a “challenging situation with surplus stock in a tough macroeconomic environment with high interest rates. Accordingly, the group’s performance declined.”
Basic earnings per share are expected to be between 85% and 95% lower than reported in 2023, it said.
Impairment
“The difference between headline earnings and basic earnings is due to an impairment of the investment in Zaloserve (Sizwe IT Africa), which has been classified as an asset held for sale as at 30 June 2024,” Mustek said.
The company said it expects to release its 2024 annual financial results on 19 September. Its shares fell more than 10% in morning trade but rallied into the close to end down 3.7%. Year to date, to Tuesday’s market close, the shares had risen by 4%. – © 2024 NewsCentral Media