JSE-listed Blue Label Telecoms says its revenue has taken a knock for the six months ended 30 November 2023, with group revenue declining by R2.2 billion (23%) to R7.6 billion.
Speaking to members of the media this morning, Brett Levy, joint-CEO of Blue Label, said “gone are the days of double-digit growth” for the company.
He noted that despite a complex and challenging operating environment, in which consumers have been significantly affected and SMEs are struggling, the company remains focused on leveraging its digital platforms and large-scale distribution network to transform the lives of ordinary South Africans.
According to Levy, the company has evolved into a “virtual mall” where products and services require no inventory management by merchants.
In a statement, the firm says core headline earnings for the period ended 30 November 2023 amounted to R420 million, equating to core headline earnings of 47.15c per share.
In the comparative period, core headline earnings amounted to R35 million, equating to core headline earnings of 3.94c per share.
It explains that the predominant negative contributions to the November 2022 basic, headline and core headline earnings per share are primarily associated with the Cell C recapitalisation transaction.
Blue Label is the largest shareholder in mobile operator Cell C, which has been experiencing liquidity issues over the years.
Excluding the positive contributions of R65 million in the current period and the negative contributions of R421 million in the prior period, the company points out that core headline earnings declined by R100 million (22%) from R455 million to R355 million and core headline earnings per share declined by 23% from 51.72c per share in the prior period to 39.90c per share.
“This decline in core headline earnings was attributable to a decrease of R119 million in Comm Equipment Company, while the remaining entities within the group increased by R19 million compared to the prior period,” the company says.
It explains that the anticipated decline in CEC’s core headline earnings was a result of a decline in gross profit stemming from increased expenditure related to the distribution agreement, as well as a significant increase in the expected credit loss compared to the previous period.
“This increase aligns with the expansion of CEC’s book and the deteriorating macro-economic environment in South Africa, marked by rising interest rates, power outages and a depreciating rand. CEC has increased its ECLs [expected credit losses] in anticipation of heightened future losses, aligning with the approach taken by other consumer lenders.
Earnings per share for the current and prior periods amounted to 45.67c and negative 8.74c, respectively.
It adds that on exclusion of the contributions resulting primarily from the recapitalisation transaction of Cell C from both the current and prior periods, earnings per share declined by 23% to 38.42c per share and headline earnings per share declined by 22% to 38.66c per share.
Gross profit increased by R58 million (4%) from R1.540 billion to R1.598 billion, corresponding to an increase in margins from 15.67% to 21.08%.
This increase in margins can be partially attributed to the growth in “PINless top-ups”, prepaid electricity, ticketing and universal vouchers, where only the gross profit earned thereon is recognised as revenue.
“The group remains vigilant in managing its total overhead costs. Furthermore, load-shedding continues to be a significant challenge faced by our organisation. It has negatively impacted the sale of prepaid electricity, prepaid airtime, starter packs and our call centre operations, all of which are significant revenue streams for the group.”
Share