Invicta battle surging costs
Steven Joffe, CEO, Invicta Holdings joins CNBC Africa to unpack the company’s performance further.
Mon, 27 Nov 2023 11:06:56 GMT
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AI Generated Summary
- Significant cost factors, including bad debt provisions and acquisition expenses, impacted Invicta Holdings' sales increase but were partially mitigated to contain the overall cost escalation.
- The company is exploring international expansion and aims to achieve a balance between local and offshore earnings through strategic acquisitions and operational adjustments.
- Infrastructure challenges in South Africa, compounded by power cuts and upcoming elections, pose operational hurdles but potential opportunities for improvement post-election.
Invicta Holdings, a South African industrial group, recently faced challenges with extraordinary costs that impacted its sales increase. In a recent interview with CNBC Africa, CEO Steven Joffe discussed the factors behind the significant cost impact on the company's bottom line. Joffe highlighted several key expenses that contributed to the cost escalation, including a bad debt provision for debtors in Africa, an interest rate swap, and acquisition costs from a recent business deal. Despite these challenges, Joffe emphasized that the company managed to contain the overall cost increase to approximately seven percent year-on-year, which he viewed as a positive outcome. The CEO expressed optimism about future performance, hinting at a potential dividend return in the upcoming period. However, Joffe explained that the decision to withhold a half-year dividend was strategic, considering the company's evolving operational dynamics and the need to explore alternative cash utilization strategies. One of the major cost drivers discussed was related to power cuts in South Africa, leading to additional expenses for diesel and investments in solar installations to mitigate operational disruptions. Joffe commended the resilience of businesses in navigating these challenges and highlighted the impressive revenue growth despite the ongoing power outages. Looking ahead, Invicta Holdings aims to diversify its earnings streams by expanding its presence in international markets. Joffe revealed that 50% of the company's earnings are now generated outside South Africa, surpassing the initial target due to currency fluctuations. The CEO confirmed ongoing efforts to evaluate potential acquisitions across various geographies while maintaining a cautious approach to ensure optimal returns for shareholders. While addressing the outlook for trading conditions in South Africa, Joffe acknowledged the upcoming elections and the infrastructure-related challenges that have affected business operations. He expressed hope for infrastructure improvements post-election to enhance operational efficiency and support economic growth moving forward.
