Tech skill shortage hits EOH
Despite seeing a reduction in revenue amid a challenging operating environment, EOH says it is keeping unproductive staff members in its tech team – because they are difficult to replace.
In a trading statement for the six months ended 31 January 2024 (HY2024), the group said it expects its revenue to decrease by between 2% and 4% compared to HY2023.
Gross profit margins are also expected to be down by between 26% and 28% from the comparable period.
That said, EOH generated an operating profit of between R5 million and R15 million for HY2024 (HY2023: R142 million), and the total headline loss per share (“HLPS”) for HY2024 of between 10 cents and 12 cents is an improvement from the 17 cents loss in HY2023.
However, the group’s total loss per share (LPS) increased from 3 cents in HY2023 to between 14 and 16 cents in HY2024.
“As reported at the 2023 financial year-end, EOH experienced a challenging second half of FY2023. This trend continued through the first three months of HY2024,” EOH said.
“Despite an improvement in trading and tendering activity in the second three-month period, the challenging environment has led to a reduction in revenue.”
“The core Digital Enablement business, including International, has seen good revenue growth, however, this has been offset by reductions in other areas, particularly in the Operational Technologies division, which has been negatively impacted by delays in closing Public Sector contracts and contracting delays with large mining customers.”
The group also noted that a major challenge facing the South African IT industry is finding and retaining appropriately skilled talent.
Thus, despite the impact on gross margins and overall profitability, EOH is retaining highly skilled staff that are not fully productive, with the group anticipating improved trading in the future.
“Management believes this is the correct medium-term approach in order to resource an anticipated increase in activity appropriately,” said EOH.
Although the group is keeping on its unproductive staff, it said that it is on track to eliminate at least R50 million for the FY23 cost base on an annualised basis.
EOH will publish its finalised financial results for HY2024 on Tuesday, 26 March 2024.
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