Despite the heavy impact of the global economic crisis on South Africa, Rectron has turned in a solid financial performance.
The company reports that, although revenue for the 2009 financial year dropped by 2,52% ending on R1,36-billion, gross profits increased by 4%, taking only its South African operations into account, while net profit before tax for the financial year increased by 5,25%.
The company has based its focus on going back to basics by adopting a conservative sales strategy, realigning ties and expanding product portfolios based on established relationships with key vendors. Renewed efforts in the re-training of employee’s and its commitment to adding the same value to its customers have also been part of this focus.
Rectron CEO Mark Lu comments: “I see no concern on the small drop in turnover: at the end of the day size doesn’t matter, only profits count. Despite the small revenue drop, Rectron remains in its dominant position in the components arena, where we have been the top Intel distributor for the last eight consecutive quarters and we have also been Microsoft’s biggest DSP OEM distributor over the last five years.
"Our market share is still growing but, unfortunately due to the global economic crisis, a lot of products’ ASP (Average Selling Price) has dropped significantly. For instance, DRAM has dropped more than 200% and LCD panels have dropped more than 100%."
Dean Prinsloo, chief operating officer of Rectron, adds: “Our decision to relocate back to our 15th Road premises, our investment in efficiency with our new automated infrastructure and our continued drive into delivering excellent customer experiences has strongly added to our growth and our dominant position in our market."
Rectron GM Cheslynne Britz says that “apart from growing market share in our conventional core business such as Intel, Microsoft, Gigabyte motherboards, Transcend memory, Seagate hard drives and LITE-ON ODD, we have successfully expanded our market influences from components and peripherals to consumer electronics and notebooks."
She adds: “The success of TomTom in South Africa has been a major milestone in which we have increased market share from 1% to 51% in just over a year. This success can be attributed to Rectron’s strong marketing, sales and service capabilities in both the dealer and retail channels.
"Taking this success into account, we aim to achieve the same with our four major notebook brands which are Gigabyte, Asus, Samsung and Sony. Rectron is confident that we can achieve success with these brands which are aligned with our current strategies that we have in place."
Compared with the 2008 financial year, Rectron Holdings' net profit before tax was down 10%. The company attributes this drop to its Australian operations, which reported a net loss of R950 000.00 for the year.
“Although they reported a loss, our Australian subsidiary made a fairly good return, after reporting a R5,7-million net loss during the first six months," says Gerhard Malan, chief financial officer of Rectron.
Britz adds that Rectron will weather the storm by focusing on its core competencies by assisting resellers in all aspects of their business by creating and adding more value to their business.
While markets in South Africa are still struggling with the recession, with few showing signs of recovery, Rectron’s focus remains unchanged for the next financial year and it will continue to work closely with its partners to ensure higher returns.