Dimension Data, which has reported an interim operating loss of $7.04 million before exceptional items, has now done everything needed to return to profitability, says executive chairman Jeremy Ord.
The group was dragged down by its US and Chinese operations, which were the only two countries, out of the 27 in which Dimension Data operates, where losses were incurred.
<B>Salient figures</B>
Dimension Data results for the six months to 31 March 2003.
Year-earlier figures in parentheses:
Total turnover: $1.01b ($1.1b)
Operating profit before amortisation, impairment and exceptionals: -$7.04m ($38.08m)
Group operating profit: -$187.94m (-$696.35m)
Profit before tax: -$194.61m (-$693.27m)
Profit for the period: -$194.85m (-$696.18m)
Basic EPS: -$0.145 (-$0.536)
Current assets: $955.58m ($1.37b)
Cash and bank and in hand: $292.01m ($622.06m)
Current liabilities: $531.98m ($1.02b)
Net cash inflow from operating activities: -$42.23m (-$74.6m)
Ord says North America is key to the group`s global strategy, although the operations there are not expected to return to profitability in the second half. The Asian presence also provides a key competitive advantage and the rest of the countries in that region are profitable.
The group has cut costs significantly, with steps including a 9% reduction in headcount since September. The group was left with 8 396 staff members at the end of March compared with 9 231 at end-September last year.
The group says its total cost base is now $335.8 million and Ord says the board has done all that needs to be done to restore profitability. IT spend is expected to improve as customers` own businesses improve, Ord says.
Total turnover for the six months to 31 March slipped to $1.01 billion from $1.1 billion for the same period a year earlier. After exceptional items, an operating loss of $187.94 million (2002: $696.35 million loss) was incurred.
A net loss of $194.85 million compares with a prior-year loss of $696.18 million.
The US was the biggest contributor to turnover, accounting for 23% of the total. This was followed by Australia (20%), Asia (19%), Europe (16%), Africa (13%) and the UK (9%). All regions achieved operating profits except the US with an $11.51 million operating loss.
Ord says the period was a challenging one, characterised by delayed IT spend decisions as a result of an uncertain global economy and geopolitical climate.
An analyst says while the results are poor, he takes heart from the fact that the group has undertaken a cost-cutting exercise, although he believes there is still scope for further staff cuts.
"I wouldn`t get too excited about DiData yet, though," he says. "Times are still tough, especially in the US, where most of the problems seem to be, but hopefully we`ve seen the worst."
The group`s share, which closed 20c up at 227c on the JSE yesterday, was trading 3c higher at 230c this morning.
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