Mustek reports slowdown in growth

Mustek on Thursday reported a marginal 1.5% rise in revenue to R2.65 billion for the six months ended December 2017, attributing the slowdown in growth to its decision to reduce its supply to retailers.

This decision, it said, had a positive effect on the gross profit margin that increased from 12.6% to 13.2%.

The main business of Mustek, its subsidiaries, joint ventures and associates is the assembling, marketing and distribution of Information Communication Technology (ICT) products and services.

Mustek said that profit from operations declined to R86.9 million, from R89.4 million before, while profit for the period increased to R46.5 million, from R35 million.

“The ZAR/USD exchange rate was extremely volatile during the period under review and the group’s hedging policy proved effective as forex losses were limited to R3.9 million (31 December 2016: R3.0 million),” it said.

Mustek’s headline earnings per share is 55.5% higher at 58.08 cents (31 December 2016: 37.34 cents) and basic earnings per share is 53.4% higher at 57.13 cents (31 December 2016: 37.24 cents).

Looking ahead, the group said it is well positioned to service and add value through its Huawei Enterprise portfolio offering and Hytera, a provider of radio communication technology.

“Our Renewable Energy division is showing good, steady growth and our fibre-optic cabling partner, YOA, is expected to contribute meaningfully in the years ahead,” it said.

“The contributions from products such as Huawei Enterprise Solutions and Microsoft Volume Licensing are expected to continue growing and although the gross profit margins might be lower on these products, net profit should increase as the additional gross profit contributions from these products exceeds the additional variable costs associated with these products.”

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Mustek reports slowdown in growth