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Mustek sees full-year revenue growth

Staff Writer
By Staff Writer, ITWeb
Johannesburg, 27 Aug 2014
Desktop PC sales are showing resilience and recovery within both the corporate and consumer space, says Mustek.
Desktop PC sales are showing resilience and recovery within both the corporate and consumer space, says Mustek.

Midrand-based PC distributor and assembler Mustek stated this morning that its revenue for the full year ended June 2014 has seen growth of 13,4%, to R4.764 billion (2013: R4.203 billion). Gross profit percentage improved from 13.5% to 13.8%, following a declining trend in recent years.

The group says it revenue increase was driven mainly by growth in the Acer, Lenovo and Asus product ranges, as well as the security range of products that it distributed. Gross profit increased to R655.1 million, from R569.3 million the previous year.

Headline earnings were 38.3% higher, at 100.72c per share (2013: 72.85c per share) and basic earnings were 27.6% higher, at 100.07c per share (2013: 78.43c per share).

The group says its more conservative forex hedging policy appears to be working well and, as a result, forex losses decreased from R51.2 million in 2013 to R23.2 million in the current year.

"Rectron Australia incurred losses in the year under review, mostly arising from legal fees incurred in settling a shareholder's dispute and retrenchment costs. Prior to the change in management, the company lost a number of key distribution rights and had very limited access to higher margin products," says Mustek.

"New management was appointed effective January 2014 and managed to secure various new higher margin distribution rights in addition to regaining most of those previously lost. Through a better product mix, the company managed to return to profitability during July 2014. The board is confident the company will show a significant improvement for the 2015 financial year."

Mustek notes increased levels of inventory and receivables resulted in cash used in operations of R83.8 million. Inventories increased by R333 million, mainly as a result of delays in orders. The excess inventory will be largely disposed of by the end of September 2014.

Resilient PC sales

"Desktop computer sales are showing resilience and recovery from the corporate and consumer demand for larger screens and more powerful processors to accomplish sophisticated tasks, which they cannot do on tablets," says Mustek.

The group adds that corporate demand is currently the largest driver of SA's technology purchases. "Windows 8.1 adoption by corporations is increasing, but we believe corporations are waiting for 'Windows 9', with its renewed emphasis on the desktop."

Large-scale fibre-to-the-home (FTTH) seems like it's finally becoming a reality, says Mustek, adding that suburbs, municipalities and gated communities deciding to roll out FTTH themselves are stimulating the carriers into action.

"FTTH infrastructure spend will benefit Huawei, cable and fibre sales in the group. In addition, it will boost the demand on all devices (desktops, notebooks, tablets and smartphones) connected to the network."

Mustek says it has now completed the first phase of its expansion from an IT distributor into a well-rounded ICT provider of end-to-end hardware solutions.

"Every level of the technology stack is now filled by well-proven branded products, from tablets and computers right through to networking/fibre systems and CCTV surveillance solutions. Our in-house Mecer brand is offered alongside a wide range of popular international brands."

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