The local and international economies have shown signs of recovery, aiding earnings growth, says Pinnacle Technology Holdings.
However, while the local economy is benefiting from a stable and stronger exchange rate, stable fuel prices and reduced interest charges, discretionary spending is still guarded.
“Customers' cash and credit constraints have eased slightly, but continue to influence day-to-day operations in all business units,” the company says, commenting on its results for the six months to December.
During the period, Pinnacle saw stronger sales, which aided revenue growth of 8.2%, to R1.464 billion, and bolstered headline earnings by 37%, to R62 million.
Pinnacle plays across the ICT market, providing hardware, software and services. It offers brands such as Apacer, CA, Canon, Dell, Hewlett-Packard, IBM, Intel, LG, Logitech, McAfee, Microsoft, Modrac, Novell, Samsung, Sony and VMware, along with its own Proline range of ICT equipment.
Pinnacle has added to its offerings in the past six months and now also supplies Fujitsu, Sharp and Samsung. This will enable it to expand or develop its offering in the data centre, audio-visual and office automation market segments.
The company expects fibre and wireless bandwidth solutions rollout and the deregulation of national backbones to boost demand for mobile and connectivity solutions, which will aid revenue growth.
Good and bad
Its Pinnacle Africa unit, which used to be Pinnacle Micro, grew revenue and operating profit, and saw better than expected sales in the retail segment. Government spending was ahead of that expected, and the channel unit reported strong revenue growth and consistent business volumes.
WorkGroup is growing its portfolio of international brands, and continues to play a dominant role in the enterprise server and storage hardware segment. Its revenue and operating profit also improved on the previous half year.
RentNet, however, was negatively impacted by deferrals and cancellation of conferences. The unit has been absorbed into Infrasol to cut back on costs.
DataNet was impacted by the depressed construction industry and delays in key projects, which resulted in lower revenue and operating profit.
The recently-created Infrasol saw revenue of R7.2 million during the first six months of operations, but made an operating loss. Infrasol is on track to recover the loss by the end of the financial year.
A new venture, styled IT Wyse, was incorporated to distribute Wyse, a specialised brand of thin client solutions. Pinnacle has a 51% stake in the new venture. After the end of the period, Pinnacle acquired a further 4.95% of DataNet, increasing its shareholding to 55.05%.
Pinnacle also acquired 51% of Moyahabo Digital Solutions, a company that distributes and supports Sharp office automation products in SA.
The company's share was flat at 352c this morning.
Related story:
Software joins growth momentum
Share