JSE-listed Control Instruments` interim profits plunged and a headline loss of 3.2c per share was incurred, mainly as a result of an electronic component shortage affecting the Shurlok automotive electronics business.
The group increased turnover 29.6% in the period, despite the sale of the major portion of the Data Pro business. Data Pro, an Internet service and business-to-business solutions provider, was sold with effect from 1 April.
Control Instruments MD Richard Friedman says the reduction in turnover as a result of that disposal was almost totally offset by the growth in sales at IT subsidiary SAN People.
SAN People`s products, which fall into a technology category called "thin client HMI", enable a variety of electronic products to be connected individually and directly to Ethernet networks and the Internet.
He says the operating loss in the IT businesses is largely attributable to SAN People, which is still in its start-up phase.
Control Instruments` other IT interests include Freight Online and a 50% shareholding in the E-mail Corporation.
Friedman says the sale of Data Pro netted the company R30 million.
"The cash was received in August and has eliminated all short-term debt and ensured that the group has an extremely strong balance sheet," he adds.
In addition to the electronic component shortage, the group`s results were also affected by a decision to provide in full in respect of money owed to the group by operations in Argentina and Chile.
Friedman says Control Instruments did this as a prudent measure given the poor economic conditions in the two countries, particularly Argentina.
The group`s other core electronics businesses, CI-FMS and CI-VDO, performed well in the period.
He adds that Shurlok has made good progress in reducing its component price costs due to improved supply levels.
However, this will be offset by business deferred as a result of the automotive industry strike and its knock-on effects. The company is not expected to achieve the same levels of profit for the full year as it did for the 2000 financial year, he says.
The Control Instruments share was trading 7.5% or 6c down at 74c on the JSE late this morning.
Related stories:
Data Pro in R30m MBO
CI subsidiary lands automotive deals worth millions
Control Instruments capitalises on e-mail explosion
Control benefits from focus on core business
Share