Metrofile expects strategic initiatives to support recovery

Metrofile’s annual headline earnings fell by almost 50% due to low-volume growth across the business and a challenging trading environment.

However, it expected the strategic initiatives it had undertaken to support recovery in the financial performance.

The document and storage management specialist reported  that headline earnings per share (HEPS) decreased by 49% to 16.5c in the year to end-June.

The group said three key factors had a negative effect on the results: the increase in interest rates; customer retention investment in United Arab Emirates (UAE); and internal process challenges within its scanning centres in MRM SA, which eroded its margins.

“While we have limited control over interest rates, we have introduced measures to limit further impact of the other two areas going forward,” it said.

Revenue increased by 1% to R1.14bn, as lower volume growth offset price increases. General market conditions were weak.

Demand for cloud services remained strong, and now contributed 32% of digital services revenue, while confidential destruction gained further traction due to the adoption of Protection of Personal Information Act (Popia) legislative requirements and positive results from the group’s customer acquisition strategy.

Operating profit, before impairments, retrenchment and closure costs was down 22% to R200m, mainly due to low growth in revenue, inflationary cost pressures and a significant reduction in profit margins in the Middle East.

“We anticipate an improvement in margin going forward, following cost reduction interventions, particularly in SA,” it said.

A final cash dividend of 7c per share was declared, bringing the total dividend for the year to 14c.

Revenue from MRM SA was down 3% as a result of lower product sales and lower revenue from digital services, which was offset by growth in secure storage after an improved price mix as well as higher paper services.

Corrective action was taken during the fourth quarter of the 2024 financial year and the group has started the 2025 financial year well with improvements in MRM SA and enhanced earnings before interest, tax, depreciation and amortisation (ebitda) margins.

Cash collections in July and August increased following the successful resolution of various long-standing customer queries, enhanced customer engagement and the successful resolution of some operational challenges.

“Following the action plans to address the 2024 challenges and an enhanced focus on customer service, we have started to yield positive results as demonstrated by an increase in pipeline growth over the past month, both in secure storage as well as requests for digitisation through IPC. Pleasingly, we are experiencing positive activities in the public sector and we expect this to yield higher sales conversion in the 2025 financial year,” it said.

MRM for the rest of Africa, which consists of operations in Kenya, Botswana and Mozambique, reported operating profit increased by 47% after the resolution of a long-standing dispute with a customer in Kenya.

MRM Middle East, which consists of operations in the UAE and Oman, continued to grow and expand its digital project pipeline. Revenue rose 21% to R120m, but operating profit decreased by 90% to R2m due to a significantly lower margin on an isolated project as well as lower margins on a new project.

During the 2024 financial year, the group decided to close the Tidy Files manufacturing component. Subsequent to year-end, Metrofile concluded the sale of assets and brand name for R15m to a third party as part of the closure of the Tidy Files unit. A provision for retrenchment and closure costs of R16.6m was recognised.

The group said it expected trading conditions to remain challenging throughout the 2025 financial year.

mackenziej@arena.africa