Consumer electronics distributor Rectron has shown a positive trend in its financial results for the first half of fiscal year 2010 ending 31 December 2009.
The company has shown the first semester revenue of R724-million, an increase of 8% from the previous year, net profit of R20,3-million, an increase of 27% from the previous year and net cash on hand at a healthy level.
The investments that the company has made, after its decision to move back to its 15th Road premises in Randjespark, have increased its customer service and delivery efficiencies thus increasing its customer base with renewed commitment from existing customers.
Gerhard Malan, CFO for Rectron, says: “We are seeing the payout on the investments that we made in the infrastructure development of the company together with the customer and employee training, through the returns that we are getting from the customers.
“Working capital is at a very good level and our excellent cash position is substantial proof of this," he adds.
The stability of the rand had a role to play in increasing profits as the value in 2009 had significantly dropped by approximately 30% from the previous year, allowing lower average selling prices. This, coupled with the company’s tight inventory management and debtor control, has allowed it to increase profitability during the six-month period.
Cheslynne Brits, GM of Rectron, comments: “We started to see growth in sales from September-October 2009 and realized that the market was starting to recover. This was an ideal time for us to renew our marketing strategies and to try and recapture more of the market. People in South Africa have learnt many lessons from the worst recession in 70 years and from this we have realised the consumers are more wary about their buying habits.”
The company has seen a huge growth in its notebook and consumer electronics segments, despite a bad month in August. The growth in the company’s mobile division can be attributed to the introduction of its mobile strategy that places emphasis on different notebook market segments using its four notebook brands catering for every category within the different segments.
Dean Prinsloo, COO of Rectron, says: “It is common knowledge in the IT market that desktop sales have flattened out and will continue with this trend, but we see many more opportunities in the mobile and consumer segment in our country, as more consumers see the benefits of owning notebooks and becoming part of social networks like facebook, and having more usability than other mobile products.”
The company has also seen good growth in the retail sector as consumer electronics products continue to add to the increase in revenue.
Prinsloo adds: “As we approach the 2010 world cup, we should also see an increase in consumer products like LCD TVs, cameras, memory cards and re-chargeable batteries, as consumers start to make plans for capturing the memories of one of the most prestigious events to grace our shores.”
The company does not see any major changes to its current strategies and seem to be focused on continuing with these strategies through the year. It will continue to place focus on its customers, which is largely the reseller network and retail channel. The company will also look to increase its business potential with government departments as ICT continues to become a focus.
The company looks forward to the next six months, expecting higher revenues and increases in profits, as it continues adding more value to its customers businesses.