The Australian subsidiary of consumer electronics distribution company Rectron posted a net loss, for the first time, for the six months ended December on the back of currency fluctuations.
Overall performance proved Rectron to be slightly more resilient during the tough economic climate, with its revenue slipping just one percentage point, to R595 million, for the period.
“Although the revenue figure dropped, gross profit is up by 3.6% and net profit before tax is up by 5% year-on-year,” says Dean Prinsloo, Rectron executive VP and COO. “This is a fairly resilient result considering current economic conditions.”
He attributes this to Rectron's massive capital expenditure in 2008, which focused on upgrading its warehouse's automatic facility, as well as relocating to a “smaller” revamped Midrand head office.
“All this puts Rectron well ahead of other players in the local market, and lean and mean enough to weather the storm,” he states.
Australian misstep
Rectron Holdings' revenue for the same period ended on R672 million, which is also 1% down compared with the same period the year before.
Gerhard Malan, Rectron CFO, points out that the company's Australian losses were a major contributing factor to Rectron Holdings reporting a lower net profit, of R15.9 million, compared with the previous year's R20.6 million.
“The Australian operations had major foreign exchange losses, which resulted in a net loss of R5.7 million for the six months.”
“This is the first time that the Australian operations have showed a net loss. This is mainly due to the depreciation of the Australian dollar against the US dollar, but we are firmly convinced that the business will bounce back to its original strength during the second half of the financial year.”
No excuses
Commenting on the results and challenges faced by the global and local ICT and consumer electronics industries, Mark Lu, Rectron president and CEO, emphasises the company does not see the recession as a business adversary for two key reasons.
A recession will humble you and force you to focus on doing the right things for your company.
Mark Lu, president and CEO, Rectron
“Firstly, when people are thinking of saving money, they may stop buying new computers, but will definitely continue investing in upgrades, which fits perfectly into our components and peripheral businesses,” Lu explains.
“Secondly, while it is true that only the fittest will survive, a recession will humble you and force you to focus on doing the right things for your company. Now is the best time ever for any business to look closely at its business fundamentals and make itself even more competitive. It is our responsibility to survive and prosper - no excuses.”
Cheslynne Britz, Rectron VP and GM, notes that while Rectron remains focused on its traditional core operations, it will continue diversifying. It will also look at adding more value-added products and services to strengthen its relevance to all stakeholders, including suppliers and resellers, adds Britz.
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