Jasco under pressure

The economic crisis continues to impact Jasco, with earnings down in the six months to December, as several contracts were put on hold.

Jasco, which has changed its year-end from February to June, says its divisions were profitable, but it saw delays in receiving contracts in its security division, postponement of wireless projects in Africa in its telecommunications division, and a slowdown in fixed-line spending.

The company says revenue was up 6%, to R264 million, from the R249 million it reported in the six months to August. Operating profit dropped 34%, to R16.1 million, from R24.3 million.

Lower operating profit dragged earnings per share down 57%, to 10c, from 23.4c. Headline earnings per share were down the same percentage, to 10.1c, from 23.5c.

However, year-on-year, revenue dropped by 18%, to R264 million, from R322 million at December 2008. Operating profit for the same period dropped 51%, from R32.6 million, to R16.1 million. Net profit declined 28%, to R11.2 million, after improved contributions from the investments in the WebbLeBLANC JV and associate M-TEC.

The company's change in year-end also affected its working capital, and cash generated from operations was down to R5 million, from R50 million, as creditors had to be paid earlier.

While its domestic products division saw a slightly better half-year than previously, the security division saw 65% of its project pipeline cancelled or delayed, resulting in revenue for the six months to December excluding any major contracts.

The telecommunications division maintained its position in the wireless arena in SA, but saw roll-out delays in the rest of Africa and a further decline in local expenditure on fixed-line networks, says Jasco.

M-TEC continued its turnaround and turned a loss of R600 000, to December 2008, into a R2.9 million profit. Jasco's purchase of 51% of Lighting Structures further contributed to the electrical division's profit.

Despite the downturn trimming profits, Jasco says all its units are profitable and it is looking at ways to counter a slowdown in contracts.

The telecommunications division will continue to face pressure during the second half of the year, but management will counter this by trimming overheads and managing costs tightly. “The outlook over the longer term remains positive, as low penetration in Africa will necessitate spend on voice and data,” says Jasco.

Although the security division will continue to experience project delays due to market pressure, its business model will continue to cover overheads. Management is focusing on trimming costs and driving sales in this unit, Jasco says.

The domestic products unit is expected to maintain its improvement, and Jasco will continue to concentrate on efficiencies in the electrical unit.

Jasco's shares were flat in early morning trade at 175c.