Vehicle sales hammer Digicore results

Johannesburg, 11 Aug 2009

Slower vehicle sales have impacted heavily on earnings for the year to June, says fleet management and vehicle tracking company Digicore Holdings.

The company's headline earnings per share and earnings per share for the year to June are expected to drop by between 40% and 50%, compared with last year. In 2008, the company reported headline earnings per share of 64.7c and earnings per share of 68.7c.

In a Stock Exchange News Service announcement on Friday, the company attributes the decline in earning to the slowdown in sales of medium and heavy commercial vehicles. Digicore says sales of these vehicles have slowed by about 48.2% in the last six months.

In addition, a slowdown in global vehicle sales of about 33% year-on-year has added to the decrease of unit sales of its new tracking device, C-track, sold locally and globally.

The company offers a range of vehicle location, fleet management, satellite navigation, workflow, mobile job planning and security tools.

The fluctuating rand added to its woes, with the foreign exchange losses resulting in lower earnings. In addition, profit on the expropriation of the head office land and buildings increased earnings in the comparative period and was not repeated in the current year.

Remedial measures

Digicore says it has no plans to retrench staff, even though it is looking into cutting costs. “As a group, we are determined to maintain a balanced approach between generating value for our shareholders, cost cutting initiatives and retaining our skilled employees.”

The tracking company is focused on expanding its “growth potential” and has employed 18 new research and development staff to “ensure that our software remains the most powerful in the industry”.

It will also open three lifestyle fitment centres for its stolen vehicle recovery products.

However, Digicore warns the return on these initiatives will only be seen in future reporting periods once the global economy starts to recover. “We are of the opinion that the trading conditions will remain tough for the next 12 months, although an improvement has already been seen in tender activity in SA after the national elections.”

Digicore will report its annual results around 9 September.

Companies are required by JSE rules to alert shareholders when they become aware earnings will differ by 20% from the previous period.