Subscribe

Defence drives Poynting recovery


Johannesburg, 30 Sep 2010

Listed telecoms supplier Poynting Holdings has reversed its loss-making position in the year to June, as orders for antennas from the defence industry picked up.

Poynting designs, manufactures and sells antenna and telecommunication products to the cellular, wireless data and defence markets. The company operates through its three divisions - commercial, defence and base station equipment.

Yesterday, the company reported revenue up 16%, to R76.29 million, a R13.66 million increase in operating profit, from a loss of R9.36 million a year ago, to a profit of R4.30 million and R6.40 million cash generated from operations. Poynting reversed last year's half-year loss earlier this year.

CEO Andre Fourie says the “defence division was the star of the year” and its performance is the reason that Poynting turned its loss into profit. The company made a net profit of R2.6 million, compared with last year's R6.6 million loss.

Poynting's defence division focuses on the electronic warfare market, which comprises monitoring, jamming and direction-finding antennas. It sells to military system integrators and exports through distribution partners.

Surging growth

In its results commentary, the company notes that its commercial division contributed 41% of turnover, compared with 49% last year, while defence grew its contribution from 27% to 40%. Poynting's base station equipment unit's revenue contribution remained flat at 12%.

Revenue from the commercial unit declined 4%, but defence's revenue grew 74% during the year. Fourie says its telecommunications clients delayed orders during the year, and it experienced a “big drop-off” in infrastructure spend from its cellular customers.

Poynting's commercial products are used in cellular and 3G end-user equipment, as well as wireless data networks employing WiFi, iBurst and WiMax technologies.

During the year, Poynting's commercial division also started providing antenna installation services, which focuses on end-users of the large cellular networks. Fourie says sales to consumers fared better than industry sales during the year.

The base station equipment division supplies transmission infrastructure equipment mainly to cellular operators. Poynting hopes to benefit from a need for smaller base stations as cellular companies increase capacity to cope with data demands.

Fourie notes that sales from its European unit fell 50% during the year, as a result of the stronger rand and the global economic crisis. As a result of the slowdown in sales, the company was not able to purchase a substantial or majority share in Poynting Europe, which is its exclusive distributor in the region.

The two parties were not able to agree on a price, says Fourie. He says Poynting wants control over the unit and is still in talks as European sales are key to Poynting's growth. Sales in Europe are starting to pick up at a faster pace than local and Africa, he adds.

Its shares closed 60% higher, to 24c, yesterday after the results announcement, a 9c gain on the day.

Related story:
Poynting returns to profitability

Share