A 317% rise in pretax profit at its defence division saw Poynting Holdings report strong earnings for the six months to December. But the telecommunications equipment group warns a repeat performance by the division in the current half is unlikely.
Poynting’s defence arm, which makes antennae for use in electronic warfare, saw an annual revenue increase of 156%, reporting pretax earnings of R4.8 million, Business Day newspaper reports. Of the division’s prospects for the second half , it said that, “realistically, performance is likely to be (comparatively) subdued”.
Nonetheless, its healthy showing cancelled out a tough half-year at the commercial division, where revenue fell 28% year-on-year. The main contributing factor to the poor result was the reduction of inventory levels in Europe, said financial director Johan Ebersohn, although the postponement of projects in Africa and slower sales in the Middle East and Asia had also played a part. “We were rolling out stock in Europe on a monthly basis, so when customers decided to stop purchasing new stock it had a big impact on revenue.”
The slower sales in Poynting’s traditional markets meant the US, where it began exporting only in 2008, was now “paradoxically” its biggest overseas market. Ebersohn said this would not remain the case for longer than a few months as demand in Europe was already “on the way back”.
The group was “in the final stages” of acquiring a 100% stake in Poynting Europe, which would give it “better control over sales”, and a chance to expand its footprint on the continent. Group revenue rose 32% to R38 6 million, with net profit at R2.26 million — up from a loss of R0.87 million in the prior year.
Poynting has its roots in an electromagnetic consulting business, first established by Andre Fourie, in 1990, at Wits University, under the name Givati Fourie and Associates, ITWeb adds. In 1997, Givati Fourie and Associates underwent a restructure. As part of this, Poynting was formed in July 1997 with the name CCG042 Investments, to conduct business as a designer and manufacturer of antennas, including radio frequency identification tag design and antenna production. Poynting’s shares closed unchanged at 39c on Friday, the day the results were released.