Jasco revenue curbed by ‘sharp’ downturn in SA economy

Listed ICT group Jasco said it continued to experience tough economic conditions in 2017, with the second half seeing a particularly sharp downturn in the South African economy due to the socio-political environment.

Against these conditions, revenue decreased by 3% and operating profit was maintained However, reported earnings decreased by 43% and headline earnings by 61%, it said.

Revenue declined to R1.044 billion, while an operating profit of R41.9 million compared to R41.7 million reported in 2016. “This was mainly due to improved gross margins and once-off cost reductions. This partly offset the impact of the lower sales volumes,” Jasco said.

Earnings of R8.1 million decreased by 43% (2016: R14.2 million) and earnings per share (EPS) was down to 3.6 cents per share (2016: 6.3 cents per share).

Headline earnings of R5.6 million decreased by 61% (2016: R14.1 million) and headline earnings per share (HEPS) decreased by 61% to 2.5 cents per share (2016: 6.3 cents per share).

Jasco’s board declared a dividend of one cent per share.

Jasco said its carrier business which accounts for 36% of group revenue suffered because telecommunications network operators continued to focus on cost reductions.

The carrier’s business unit delivers products and services across the telecommunications value chain, from design and planning of networks to configuration, integration and support.

“The delayed sale of Neotel and the extended time taken to re-capitalise Cell C resulted in significant reduction in network capex spend, negatively impacting both Jasco’s order book and revenue,” Jasco said.

“This was somewhat offset by increased spending from Telkom on additional optical network infrastructure, as they further cater for the increase in demand for data services. The group continued to diversify its portfolio to meet the higher demand for products and solutions, such as fibre to the home and business (FTTX),” it said.

Jasco said that orders remained flat year-on-year, which resulted in revenue being 7% down at R385.9 million. Despite the impact of the volatile exchange rate, operating profit was up by 7% from R47.8 million to R51 million due to good cost control, it said.

The carrier business unit delivered an operating margin of 13.2% (2016: 11.5%) and remains Jasco’s largest profit contributor.

It said that the higher level of operating margin is not expected to continue due to the inclusion of once-off projects during the year.

Read: Jasco warns of lower revenue under current economic cycle in SA

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