Pinnacle Technology Holdings` profits were flat in the six months to 31 December, with revenue increasing only by 2.7%.
CEO Arnold Fourie blames the performance on the stronger rand, which strengthened by 31% in the period.
"Although the strength of the currency contributed to make IT products and peripherals more affordable, the average revenue and gross profit per unit reduced substantially," he says.
Revenue rose from R176.77 million to R181.66 million, with pre-tax profit slipping from R4.94 million to R4.05 million. Net profit of R2.86 million compares with a year-earlier figure of R2.9 million.
Pinnacle comprises 15 operating companies with a focus on IT infrastructure, software and storage, IT services, and telecommunication. The core business, Pinnacle Micro, supplies IT products to retail, government and corporate clients.
"Pinnacle Micro returned satisfactory results for the first six months of the year, despite a significant slowdown in government procurement during this period," Fourie says.
Although the business increased turnover and gross profit, these increases were not enough to offset the growth in operating expenses, resulting in cost reduction measures being implemented in November.
Fourie says steps included the centralisation of administrative functions, staff cuts and reorganisation of branch operations.
Since December, Pinnacle has received significant orders from various government departments, which he says should contribute materially to the operating results for the period to 30 June.
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