Jasco, which has completed its three-year restructuring programme, is targeting new revenue streams in a bid to boost its top line to about R1.5 billion, while adding to its margins.
The listed company has sold off several entities that were not adding to its profit line, which led to a revenue decline of 9.4% to R1 billion in the year to June. However, CEO Pete da Silva believes the clean slate will provide the company with a base to grow.
During the restructuring phase, Jasco sold non-core businesses such as its lighting and telecoms structures unit, and the automotive business.
Jasco is also seeking to expand outside of SA as the local economy is sluggish, while neighbouring countries are seeing gross domestic product grow at rates two or three times faster than SA, says Da Silva. The latest statistics show SA only gained 0.6% in the second quarter, effectively making growth this year flat because that quarter's gains were cancelled out by the decline in the previous quarter.
Da Silva says: "I've got my right eye on the future of Jasco and my left eye on the economy." The month-long metal workers strike earlier this year saw the company start its new fiscal period facing factories that were closed. "The first month was hell," says Da Silva.
Challenges ahead
However, Jasco's "reconstructive surgery" is now complete, says Da Silva. During the process, Jasco created a single brand from 23 disjointed brands, increased its scale, expanded its national footprint and consolidated its 11 businesses to four, and also removed several management levels. It still has challenges ahead, such as finally disposing of its stake in M-TEC, although it has signed a non-binding heads of agreement for R119 million.
Jasco also has to deal with operating losses incurred in ICT Networks, particularly during the second half, which Da Silva says the company incurred as a result of the spillover effect of the current mobile price wars.
However, Da Silva says the structure of the unit has been changed, and it has since started looking "better". He says the company does not want to "get drawn down in the race to the bottom" of the price wars.
Despite the challenging year, with a loss of revenue that saw the company's operating profit decline because it still has the same cost base, the group managed to reverse last year's loss. This year, it reported profit after tax of R6.5 million, a "strong" improvement on last year's loss of R107.4 million.
Da Silva says Jasco wants to boost its revenue to R1.5 billion, and is looking for deals that will add value to the company to do so. However, he says the revenue target could be brought down if margins improve, because the key aim is bulking up the bottom line.
The company will also continue to improve its structure, incorporating units that do not generate at least R150 million a year into other entities, in a bid to strip out costs, says Da Silva.
Jasco will also continue to increase the range of products and services sold into its existing customer base as part of its cross-selling activities, and will also target "strategic" large corporate and public entities, with a particular focus on energy optimisation, to boost sales.
Share