Mustek profits up again on Covid demand, supply disruptions

Mustek has continued its robust financial performance, on Wednesday reporting growth in interim headline earnings per share of 17.3% on revenue growth of 12.5%, despite the weak state of the economy.

Revenue for the six months to end-December was R4.2-billion, from R3.7-billion a year ago, while profit for the period was R152.1-million, from R187-milion.

“The group had a strong trading performance for the six months to 31 December 2021 and is benefiting from the ‘new normal’ that includes working from home and remote learning,” it said in a statement to shareholders.

“In addition, our diversified portfolio of carefully chosen products and services is providing a clear advantage in the marketplace.”

Revenue growth was across the board, with the group’s two largest segments, Mustek and Rectron, growing their revenue by 16.1% and 11.1% respectively.

Gross profit margin increased to 16.2% (31 December 2020: 13.9%) due to increased demand for the group’s products as well as ongoing worldwide supply shortages. These shortages created strong pricing power and “we expect this situation to continue well into 2023”.

The weaker rand/dollar exchange rate also assisted higher gross profit margin, but its benefit was offset by foreign currency losses.

Strong cash flow

The group generated strong cash flows — R283.8-million from operations — which was the result of the healthy operating performance and careful working capital management. “Management continues to  focus on optimal working capital management as it is a driver of the group’s profitability.”

“Two years have passed since the onset of the Covid-19 pandemic and demand is still buoyant,” Mustek said. “We are confident that the work- and learn-from-home reality is more than a passing trend. This has created and continues building a valuable new customer base for our business.”  — © 2022 NewsCentral Media