Poynting sees losses in commercial and CCS divisions - CNBC Africa

Poynting sees losses in commercial and CCS divisions

Earnings

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Poynting provides antennas for LTE, 3G and 2G, for mobile and fixed wireless solutions. PHOTO: Extreme Tech

“Despite the improved financial position and performance as illustrated when recalculating adjusted PAT and adjusted EBITDA, we still consider that the overall group profitability for the 2014 financial year should have been better,” [DATA POY:Poynting] said.

“The losses in the commercial and CCS divisions were disappointing. CCS is a start-up division in its own right – the group continued its investment in product development to ensure relevance to the market, which resulted in a loss of four million rand for the year.”

According to the South Africa-based company, which provides antennas for the telecommunications, defence and security markets, the commercial division restructured its South African sales channel, with a split of Direct-to-Reseller and Direct-to-Consumer activities.

(READ MORE: Defence divisions performance drives Poynting’s H1 results)

“The move of commercial product production from South Africa to China also absorbed management time, resulted in increased operational costs and stock write offs. Revenue declined by 10 per cent mostly due to reduced sales to Europe,” said Poynting.

“The group has undertaken the following actions to improve commercial profitability – a renewed focus on driving revenue, and developing focussed sales channels, addressing sales declines in the European market, focus on supplying 4G/LTE products which are well differentiated and IP protected.”

Poynting saw an increase in group revenue to 132 million rand for the year ending 30 June 2014 from 89 million rand for the same period in 2013.

However, it reported a trading operating loss of 6.9 million rand in the 2014 year from a profit of 6.8 million rand in 2013 and a loss before taxation of 110.5 million rand from a profit of 7.2 million rand.

“The group profit potential is indicated by considering the historical annual profitability of the different segments. Commercial and CCS performance this year was disappointing and getting these divisions to breakeven and back to profitability is a priority for the year ahead,” the company said.

“Aucom should benefit from the potentially large African DTV rollout projects and vertical expansion of product offering. The RNS acquisition is nearing completion and our current assessment is that they are capable of achieving their profit targets.”

(READ MORE: S.Africa’s Poynting to acquire Radio Network Solutions)

Poynting added that it maintains an acquisition pipeline and is engaging with several targets locally and internationally.

“The focus will be to secure a European or USA footprint to support the DS product range and distribution potential, to continue to grow European customer base for commercial, and further identifying companies which fit our market profile and provide synergies to the group,” it said.

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