Jasco Electronics predicts a drop in headline earnings per share (HEPS), for the six months to 31 December 2017, as it continues to find its earnings "hampered by market conditions".
HEPS are likely to fall by between 76% and 86% (between 0.88cps and 1.52cps), the group said in a SENS statement. This compared to HEPS of 6.34cps reported in the previous corresponding period.
Earnings per share (EPS) are expected to be between 63% and 73% lower (between 1.71cps and 2.34cps) than the 6.28cps reported a year ago.
"The difference between earnings and headline earnings growth relates to the change in control in the Kenya business from a subsidiary to an associate, which gave rise to a net gain of R1.7 million or 12% at an earnings level," Jasco says.
Despite the earnings drop, the company has improved its profitability compared to the immediately preceding six-month period to June. Revenue growth for the six months is expected to be between 6.5% and 7.5% higher than the previous corresponding period's R521.1 million.
In September last year, the group already warned the "challenging economic climate" was expected to prevail, with the volatile exchange rate continuing to impact the group negatively.
The JSE-listed electronics company says the key features of the performance in the last six months include declined performance in a number of the divisions. The carriers division's revenue and profit performance was flat due to the subdued telecommunications sector, while intelligent technologies' revenue and profit performance declined due to a disappointing performance in power and renewables due to the continued slowdown in its markets.
The group's electrical manufacturers performed well on steady revenue with improved profitability, but the international sector's progression has been slower than anticipated due to depressed conditions in Kenya and the Middle East, with higher start-up losses than expected.
The enterprise segment's revenue and profit performance improved on the inclusion of Reflex Solutions, of which Jasco acquired 51% on 1 May 2017. This contributed strongly to revenue and operating profit growth for a full six-month period. However, the group says this contribution did not fully flow through to earnings due to the minority's 49% share of profit of R4.6 million.
"Although the economic outlook for 2018 remains uncertain, Jasco will continue its focus on improving profitability through its strategy of reducing costs and targeting higher-margin revenue," the group says.
Jasco's unaudited interim results for the six months ended 31 December 2017 will be announced on or about 12 February 2018.