Grintek has reported a 12% increase in earnings and a slight decrease in headline earnings for the six months to 31 December.
Revenue slipped by 10% from R683.03 million to R615.77 million while gross profit fell by 16% from R127.12 million to R107.08 million.
Newly appointed CEO Shaun Liebenberg says the gross profit decline is mainly because of declining sales revenues in telecommunications, an additional contract overrun of R5.3 million on the airborne communications system contract, and what he describes as the impact of trading under a volatile currency.
"Selling and administration expenses increased by 7% which, together with the reduced gross profit, translates into a 60% reduction in operating profit."
This, he says, was offset by a net gain of R11.6 million from foreign currency transactions, resulting in a 5% reduction in pre-tax profit, from R21.72 million to R20.74 million.
Profit after tax increased from R11.46 million to R15.44 million while earnings for the six months increased by 12% from R12.19 million to R13.62 million. Headline earnings, however, showed a slight decline, from 4.9c a share to 4.6c a share.
Turnover at the telecoms division fell by 19.7% from R323.35 million to R259.53 million. The defence electronics division, however, increased its turnover from R277.2 million to R281.01 million and at the industrial electronics division turnover fell from R76.79 million to R68.63 million.
"Overall, group performance in the second half is expected to be stronger than that of the first half of the year," Liebenberg says. "The volatility of the rand/dollar exchange rate continues to hamper efficient operational planning. A more aggressive approach to efficiency improvement is currently being implemented."
Demand for defence products remains high, while the industrial electronics division has experienced an increase in demand for aviation systems. Telecommunications demand remains steady, although the group does not expect a significant increase in demand in the immediate future, says Liebenberg.
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