“CEG was, unfortunately, impacted by a material decline in the maize price, a big driver of agricultural machinery sales, flat conditions in the construction machinery market and poor economic growth in the markets serviced by Kian Ann in these tough market conditions,” [DATA IVT:Invicta] said.
“CEG’s revenue declined by seven per cent, gross margins were under severe pressure, and, whilst management managed to reduce expenses below the comparative period’s expenses, operating profit declined by 28 per cent. CEG has continued to manage working capital well.”
The group reported an overall operating profit decline of 13 per cent to 426 million rand for the six months ending 30 September 2014 from 492 million rand for the same period in 2013.
“Trading conditions in the six months under review were the most challenging experienced by the Invicta group in a long while,” it said.
“The combined effect of the six-month strike in the platinum mining industry and the nationwide NUMSA strike in July hurt the South African economy, especially the mining and manufacturing industries.”
Profit before taxation declined 17 per cent to 351 million rand in the 2014 interim period from 423 million rand in 2013 and earnings per share decreased by 18 per cent to 293 cents from 358 cents.
However, Invicta did report revenue growth of three per cent from 5.12 billion rand in 2013 to 5.26 billion rand in 2014.
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“Trading conditions in the second half of the year are expected to continue to be tough, but slightly better. In CEG, the agricultural machinery market volumes are expected to continue declining in the short term, and gross margins are likely to continue to be under pressure,” Invicta said.
“Growth in Africa is a focus, but is expected to be slow. The markets serviced by Kian Ann are not expected to improve much in the short term, but recent steps taken at Kian Ann should improve performance.”