Jasco swings to a loss as telecom firms spend less on infrastructure
Technology group Jasco Electronics on Monday said it had swung to a loss for the six months to end-December as SA's telecommunications operators cut back on their infrastructure spending.
The group, which provides transmission and operational support systems for telecommunications networks across Southern Africa, said though the performance from continuing operations to December 2019 was weaker than the comparative period to December 2018, it improved from the preceding six months ended June 2019.
Profit from continuing operations decreased from R1.6m in December 2018 to a R19.1m loss in December 2019. This was an improvement from the R42.7m loss in the preceding six months to June, said the company.
Including discontinued operations, the total profit attributable to ordinary shareholders decreased from R2.9m in December 2018 to a R13.5m loss in December 2019.
Earnings per share (EPS) decreased from 1.3c per share in the previous comparable period to a loss of 6c per share.
Headline earnings per share for the company decreased from 1.3c to a loss of 5.2c per share, but improved compared to the 11.9c loss per share in the preceding six months to June 2019.
Jasco said the difference between earnings and headline earnings in 2020 relates to a loss on disposal of fixed assets and the loss on disposal of a small subsidiary.
The company said its operational performance was affected by poor results from its ICT-Carriers business and continuing losses in power and renewables unit. This offset the good performance from the ICT-enterprise business made up of Datavoice and Reflex Solutions, the turnaround of the security and fire unit, and a strong first half by the Electrical Manufacturers unit.
The ICT business remains Jasco’s biggest unit, accounting for about 75% of turnover. The introduction of the high-speed 5G network and continued increasing demand of data centres had been expected to drive growth in this segment, due to fibre requirements for connectivity, a business that Jasco is already in.
The ICT-carriers' revenue decreased by 50% to R100m, mainly in Webb Industries, a telecommunications equipment supplier business, due to a slowdown in spending for a network infrastructure rollout by a major telecom operator. This resulted in operating profit decreasing by 89.7% to R3.4m due to lower revenue, the company said.
Moving ahead, the company said it “continues to operate against difficult economic and market conditions in all its markets, with the outbreak of Covid-19 creating exceptionally challenging conditions”.
Jasco also said the rand's weakness makes trading more difficult, together with the risks associated with the recent credit ratings downgrade by Moody's and “the electricity crisis continues to be a real threat to economic growth”.
To counter this, Jasco's strategy is to manage costs, increase profitability and add new products and services to its portfolio, with an emphasis on new organic fast-growing and higher margin business areas, the group said.
Shares in Jasco remained unchanged from last week, closing on Monday at R0.18 a share. It has a market value of R41m.