Infiniti Technologies has released the interim results that led it to issue a profit warning last week. The warning proved to be accurate with earnings for the six months ended February below that of the previous year. Infiniti shares have been trading at 40 cents, down 40% since the warning was issued.
Although the company increased turnover by 36% to R234.7 million, operating profit fell almost 40% to R6.4 million and headline earnings are down 53%. Earnings per share were calculated at 1.75 cents, down 56% from the same period last year.
An upbeat CEO Mike Roussos says he is glad the results have been released and hopes it will calm the market. "It did not turn out as bad as some people expected."
The company says three major factors contributed to the weak results: A R4.6 million loss within the value-added business, structural problems in the software distribution business and the high level (more than R37 million) of interest-bearing debt. According to Infiniti, the loss in the value-added sector will not be repeated and the software distribution business has been successfully merged with hardware distribution, leading to lower overheads. It says "every effort" is being made to reverse the debt situation.
These factors and further restructuring, like the 30 recent retrenchments, have led Roussos to predict an 8c per share earning by year-end, on the back of a R11 million profit. "But it will still be below our results of last year," he admits.
While weary of predicting the stock market, he says the share price should recover, eventually. "Once it gets a knock like this it takes a while before people are willing to invest again. But once we overcome these issues, things will go better."
Roussos adds that the company will concentrate on consolidation for the next six months, even though it is still trading under a cautionary announcement. "This has taken us a step back and we need some time to recover."
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