Retail drives Pinnacle's earnings

Pinnacle Technology Holdings beat the usual holiday blues at the end of last year, thanks to increasing sales through retailer outlets.

The company this morning released its results for the first six months of the year, which included two months of revenue and profit contribution from Axiz. Pinnacle grew revenue to R2.1 billion, a 43% gain, and net profit improved 61%, to R89 million, in the first six months to January.

CEO Arnold Fourie says the gains in revenue were mostly the result of increased penetration into the retail space, which resulted in December being the best month for sales during the half-year.

Resellers don't stock up for the holiday period, due to the festive season break, which hampers sales, says Fourie. Pinnacle grew revenue 25% on an organic basis, excluding the two months of contribution from Axiz, which added R268 million in turnover.

Pinnacle bought Axiz last year for R150 million. The distributor will add about R2 billion to Pinnacle's yearly revenue.

Stripping out the contribution from Centrafin, revenue grew 22%. Pinnacle bought Centrafin for R8 million during the year to June. Fourie says the company, which offers financial services, will enhance sales at the rest of the group's operations.

Pinnacle will continue to focus on organic growth, notes Fourie. He wants to drive more unit sales through Pinnacle Africa, the group's largest subsidiary. During the half-year, it grew revenue 24%, to R1 billion.

Infrasol, a start-up company that Pinnacle uses to chase large infrastructure contracts, is not yet profitable. It broke even on the earnings before interest, tax, depreciation and amortisation line. However, the unit won a large deal in January, which will turn it profitable, says Fourie.

Fourie is also focusing on improving synergies between Workgroup and Axiz, which will aid gross margins, and wants to expand Axiz across Africa. He says the company already has outlets in Zambia, Botswana and Namibia, and will open an office in Kenya and Angola soon.

Fourie believes Africa is where future growth will come from, and there is currently low penetration in terms of computing equipment. He says local companies, and not Europeans, should benefit from the growth potential.