JSE-listed PC distributor Mustek says earnings will be lower in the first half of the year, because of the volatility of the rand against the US dollar.
The company yesterday issued a trading statement indicating headline earnings per share will be between 55% and 65% lower than the previous corresponding period's 36.20c.
Basic earnings per share are expected to be between 35% and 45% lower than the basic earnings of 36.12c per share of the last first half, it said in a statement to shareholders.
The lower earnings is despite a 20.9% increase in turnover to R1.96 billion, and a gross profit margin increase to 14.7%. However, profit was hampered by a R62.9 million foreign exchange loss, compared with a gain last year of R14.7 million.
Mustek says it will recover a “significant portion” of the loss when the related inventory is sold and it pays certain foreign creditors at lower levels than the R8.10 rate used at the end of December to revalue foreign creditors.
“Mustek uses the rand/USD spot rate at the beginning of each month to determine its selling prices with adjustments made during the month should the exchange rate change substantially,” it explains.
However, because of the “sharp and sudden depreciation” of the rand in September, it has to account for inventory at lower levels than where the rand's value sunk to, Mustek says. It explains it cannot revalue the inventory to reflect this move because of accounting rules.
Mustek's interim results are expected to be published on 29 February.
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