Faritec has warned that its revenue declined by about 19% for the six months to 31 December. The company doesn't expect the current six months to show an improvement, and has embarked on a cost-cutting exercise.
During the last six months, revenue dropped from R502-million to R414-million from the comparable period in 2007.
"The contraction in revenue growth has been experienced in our Gauteng and Public Sector regions, with the coastal and Africa regions reporting flat growth year on year," according to a statement from the company.
"The decline in hardware and software product revenues is as a result of a decrease in spend from almost all of our customers in the affected regions and we put this down to the current economic downturn."
Faritec's gross profit margins dropped from 24% in the previous year to 23%.
The statement adds:: "It is the view of management that the slowdown in trade experienced during the first half of our financial year will not improve significantly during the next six months. With this in mind we have embarked on a major cost cutting exercise, which we initiated in the October/November 2008 timeframe.
"This exercise has resulted in a headcount and capex freeze and a significant reduction in operating expenses and people-related costs. This has already realised R2-million worth of savings per month and once completed by the end of March, will result in approximately R4-million of cost reductions per month.
"A conservative analysis of our current pipeline for the second half of the year and the above cost-cutting exercise should see Faritec make a profit for the second half of the year, from 1 January 2009 to 30 June 2009."