Ellies tumbles on warning of widening interim losses
12 December 2022 - 18:50
by Mudiwa Gavaza
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Ellies shares fell more than 6% on Monday after the electronics company said it expects to report widening losses for the six months to end-October.
The electronics group, which imports, makes and sells equipment such as aerials and power trolleys, as well as undertaking solar installations, will report a headline loss per share of 4.17c-4.99c compared to a loss of 4.36c in the previous comparable period.
The group, which also installs satellite dishes for MultiChoice, has fallen on hard times, prompting it to start consultations with unions about jobs cuts in September.
The company said the restructuring has cost it R18m in respect of retrenchments, which amounts to 2.24c per share of the headline loss in the period.
A thinly traded stock, Ellies’ share price fell 6.25% on Monday to 15c. The share is down 50% so far in 2022.
Ellies has struggled to maintain profitability in recent years as consumers cancel their cable and satellite television subscriptions and shift to online video streaming.
Despite this state of affairs and an economic downturn, the company struck a positive note, telling shareholders that revenue is expected to increase. “The general trading environment continues to be constrained, with consumers under pressure with rising costs as a consequence of the global inflationary environment and the increasing cost of fuel.”
It said the group’s trading results “have seen an improvement, however”, with revenue up by 5.6% compared to the six months ended October 2021, while gross profit has also improved marginally. Operating costs, excluding those for retrenchments, have been contained below inflation.
The group’s turnaround is expected to be complete by its year end in April 2023.
The strategy is expected to result in costs savings, while the restructuring of operations is meant to position Ellies “as a smart infrastructure business which will include comprehensive solutions for alternative energy, water storage and harvesting, connectivity and smart home technology”.
The company, valued at R121m, recently struck a deal with lenders that will increase its ability to have stock on hand to meet demand from load-shedding. Ellies says it expects this combination of activities and efforts to bear fruit and right size the business.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Ellies tumbles on warning of widening interim losses
Ellies shares fell more than 6% on Monday after the electronics company said it expects to report widening losses for the six months to end-October.
The electronics group, which imports, makes and sells equipment such as aerials and power trolleys, as well as undertaking solar installations, will report a headline loss per share of 4.17c-4.99c compared to a loss of 4.36c in the previous comparable period.
The group, which also installs satellite dishes for MultiChoice, has fallen on hard times, prompting it to start consultations with unions about jobs cuts in September.
The company said the restructuring has cost it R18m in respect of retrenchments, which amounts to 2.24c per share of the headline loss in the period.
A thinly traded stock, Ellies’ share price fell 6.25% on Monday to 15c. The share is down 50% so far in 2022.
Ellies has struggled to maintain profitability in recent years as consumers cancel their cable and satellite television subscriptions and shift to online video streaming.
Despite this state of affairs and an economic downturn, the company struck a positive note, telling shareholders that revenue is expected to increase. “The general trading environment continues to be constrained, with consumers under pressure with rising costs as a consequence of the global inflationary environment and the increasing cost of fuel.”
It said the group’s trading results “have seen an improvement, however”, with revenue up by 5.6% compared to the six months ended October 2021, while gross profit has also improved marginally. Operating costs, excluding those for retrenchments, have been contained below inflation.
The group’s turnaround is expected to be complete by its year end in April 2023.
The strategy is expected to result in costs savings, while the restructuring of operations is meant to position Ellies “as a smart infrastructure business which will include comprehensive solutions for alternative energy, water storage and harvesting, connectivity and smart home technology”.
The company, valued at R121m, recently struck a deal with lenders that will increase its ability to have stock on hand to meet demand from load-shedding. Ellies says it expects this combination of activities and efforts to bear fruit and right size the business.
gavazam@businesslive.co.za
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