Telecommunications and electronics group Grintek has reported a 65% plunge in its earnings for the half-year to December 2002, blaming the performance on "the conundrum" of the rand.
<B>Salient figures</B>
Grintek results for the six months to 31 December 2002.
Year-earlier figures in parentheses, move in square brackets:
Revenue from sales: R683.03m (R606.36m) [+13%]
EBITDA: R60.93m (R45.64m) [+34%]
Operating profit: R43.06m (R33.17m) [+30%]
Profit before tax: R21.72m (R57.96m) [-63%]
Profit after tax: R11.46m (R38.47m) [-70%]
Earnings: R12.19m (R34.76m) [-65%]
Headline earnings: R13.41m (R36.16m) [-63%]
HEPS: 4.9c (12.4c) [-60%]
Current assets: R1.07b (R933.89m)
Cash: R134.21m (R194.98m)
Current liabilities: R775.5m (R655.49m)
NAV per share: 137.4c (126.5c)
Cash generated by operations: R55.57m (R67.83m)
However, MD Sybrand Grobelaar says the six months were characterised by a "relatively strong performance at operating level" and profitability in the second half is expected to be stronger than in the interim period.
"The group continues to improve its control over foreign currency flows in an attempt to limit some of the volatility in accounting for hard currency contracts in rand terms, particularly in periods of a strengthening rand."
The telecommunications market in Africa is improving as infrastructure is implemented and expanded, he says. "The finalisation of Telkom`s initial public offering should result in greater confidence in this sector."
He also expects increased business for commercial avionics and for improvements to airports in the Southern African Development Community region.
The defence order book is being constantly replenished and significant export orders have been secured in new markets.
Revenue from sales grew 13% to R683 million in the interim period, with 28% of that derived from exports.
The telecoms division`s turnover grew 10% while the industrial electronics division recorded a 28% growth in turnover. Defence turnover grew 12% although at unfavourable exchange rates.
"The strengthening of the rand has exerted pressure on the net margins of the three defence units, where export business accounts for around 56% of sectoral turnover," says Grobelaar.
The group incurred a foreign exchange loss of R15.75 million compared with gains of R25.12 million in the same period the previous year. This resulted in a 65% decline in earnings to R12.19 million.
Grobelaar says the declaration of a dividend of 3c a share is "based on current prospects and a sound operating performance".
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