Alviva reports below par results – points to uncertain outlook

Alviva, a provider of information and communication technology products and services, on Monday (2 March), reported a 4% decline in revenue for the six months ended December 2019, to R7.4 billion.

The group said it was able to slightly improve its gross profit margins although not sufficiently to offset the lost revenue.

Headline earnings per share was down 36% to 94 cents per share.

Profit for the period dropped 43.9% to R121.9 million, while earnings earnings before interest, taxes, depreciation, and amortisation was down 7.6% to R424.7 million.

Expenses have been reasonably controlled throughout the period, it said.

“It should be noted that expenses generally lag revenue and there remains an absolute focus in each entity within the group to manage expenditure where possible so as to be aligned with expected revenues,” Alviva said.

Alviva is the parent of IT distribution companies Axiz and Pinnacle. It said that both units failed to repeat some of the large deals concluded in the comparable reporting period.

For Axiz, Alviva said that during the last 18 months, it has been implementing Gartner’s Bimodal IT model, being the practice of managing two separate coherent models of IT delivery, one focused on stability and the other on agility.

In order to achieve this, Axiz needed to modernise its IT systems and processes to be digitally ready and to ensure delivery of cloud products and services to the channel in a more digital manner, it said.

“These key strategies were implemented over and above the challenges that were faced, operating in a declining market, coping with some major once-off events faced by a number of key customers, primarily in the consumer retail and public sector segments.”

Pinnacle, it said, performed reasonably in a lacklustre market, although similarly did not enjoy any sizeable deals during the period.

Alviva said that the restructuring relating to its Axiz unit is underway and the move onto the same ERP system will hopefully be concluded towards the end of this financial year.

The group warned that the outlook for the year to 30 June 2020 is looking uncertain.

“The first six months’ results will make it hard for the Group to match last year’s earnings and the Board does not see any change to the economic conditions that will create an environment of growth.

“In addition, the group nervously awaits the resolution of the coronavirus which, if not speedily resolved, could have an impact on Alviva’s ability to source products quickly and efficiently. Consequently, the Board expects a reduction in earnings for the Group compared to the previous year,” Alviva said.

Read: Alviva bets on new businesses in challenging economy

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Alviva reports below par results – points to uncertain outlook