Electronics group Jasco remains upbeat about its prospects, despite seeing a 34% drop in headline earnings per share, to 32.5c, due to share dilution and a disappointing performance by its cable division M-TEC.
Jasco's interim results for the period ended February show overall revenue increased by 16%, to R603 million. The drop in HEPS and earnings per share was due to the dilution caused by the 17.2 million new shares issued to its BEE investor, Community Investment Holdings.
The Jasco results statement says uncertainty brought about by the global financial crisis and its negative impact on the South African economy remains a concern.
Evidence from retail and manufacturing data, indicating that the South African economy is heading for a recession in several sectors, makes forecasting beyond the new financial year-end of 30 June 2009 very difficult, the statement says.
However, Jasco believes expenditure by operators and service providers, to improve the teledensity in Africa, will continue, albeit at a slower rate than previously planned. In addition, broadband wireless technologies continue to be enhanced and improved, allowing operators to upgrade existing fixed-line and wireless networks to access new customers and improve revenue streams from the same infrastructure.
Jasco's telecommunications division is well positioned to take advantage of the expected growth, the statement says, as it offers products, solutions and services to access both fixed-line and wireless networks.
The security sector continues to spend in the build-up to 2010 and beyond, although the group has seen a slowdown in private and public sector expenditure, due to cost-cutting exercises and the shortage of funding.
The Domestic Products division is strongly affected by the downturn in consumer spend. This is expected to continue for the rest of the current financial year. However, decreasing interest rates and the continued roll-out of low-cost housing should have a positive impact on demand in this division during the first half of the next calendar year.
“This could be marred by the further impact the potential job losses could have on consumers,” the Jasco statement says.
Jasco believes the lower demand for cable products is expected to continue for the next six months. The company's management has responded by reducing overhead costs at M-TEC to reflect this decreased activity and, with an anticipated rise in commodity prices, Jasco expects to show an improvement over the results for the nine months ended 28 February 2009.
“Management remains confident that expenditure on essential infrastructure roll-outs, in both the power and telecommunications sectors, will continue in the next year and, therefore, expect a further improvement in the result for the full year ending 30 June 2010,” the interim results statement says.
Jasco share price was last seen steady at 135c, with 78 000 shares changing hands.
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