The worst downturn in the history of the semi-conductor industry combined with rand strength has led to Labat Africa reporting its first trading loss.
The group incurred a headline loss of 7.1c a share for the year to end-February, compared with headline earnings of 17.2c a share the previous year. Revenue fell by 28% from R244.93 million to R175.65 million.
An attributable loss of R13.65 million compares with previous earnings of R30.39 million.
"Corrective action has been taken and there are positive signs of a turnaround in the semi-conductor industry," says Labat CEO Brian van Rooyen. "SAMES, our semi-conductor company, is again projecting to make a profit in the year ahead.
"In common with all exporting companies we have had to make radical changes to our business model to counteract the weakness of our trading currency, the US dollar.
"Apart from the obvious cost-cutting exercises which all dollar-dependent businesses have had to do, we have developed new markets to increase volumes and have launched new products and downstream businesses which are initially focused on the local market."
Van Rooyen says although the retail industry has performed well in the past year, the continuing mismatch between Labat Retail and the other businesses in the group, which are technology related, can no longer be sustained. Labat is in talks aimed at selling the retail business, which will eliminate the majority of the group`s bank borrowings and interest charges.
The group is also planning a rights issue as a further debt-reduction and capital-raising exercise.
"Each of our technology businesses is projecting substantial profits for the years ahead and we are confident that we will meet these projections," he says.
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