EOH delivers upbeat outlook despite interim loss

EOH, a leading technology company, recently released its results for the interim period ending 31 January 2023, revealing a headline loss per share of 13 cents per share, an improvement from 14 cents in the previous period. Despite this loss, the company reported an 8 per cent increase in revenue, signaling a positive outlook for the future. Megan Pydigadu, Chief Financial Officer of EOH, joined CNBC Africa to discuss the results and shed light on the company's strategic initiatives moving forward. Pydigadu highlighted the company's focus on addressing its capital structure to improve profitability. EOH successfully closed a rights issue, raising 600 million to pay back debt and subsequently refinanced its debt, significantly reducing its debt burden. She emphasized that the debt had been the primary factor contributing to the company's losses, but with the debt reduction and improved interest costs, EOH is optimistic about its financial performance going forward. With a debt reduction of 1.2 billion Rand down to 700 million, EOH now has room to invest in its business for growth. This marks a significant milestone for the company, as it is the first time the board has approved funding for business investments. EOH has allocated 80 million for business investments this year, with 48 million already invested by the half-year mark. The company's growth strategy, encapsulated in the acronym 'GET' - standing for growth, efficiency, and talent - underscores its commitment to expanding operations and enhancing capabilities. When discussing growth opportunities, Pydigadu highlighted the company's international business, particularly in the digital space, which saw a robust 45% growth. EOH is keen on capitalizing on digital opportunities such as cloud security, application development, and digitization for enhanced customer efficiency. The company also aims to scale its intellectual property (IP) offerings internationally, leveraging the scalability and market reach of IP solutions. In terms of segmental performance, EOH organizes its business into four key areas. The infrastructure services segment, focusing on connectivity and IT management, experienced strong double-digit growth. However, the operational technology (OT) segment faced revenue decline due to reduced spending in areas like mining and manufacturing, primarily from state-owned enterprises. To counter this, EOH is exploring partnerships and expansion opportunities in East and West Africa to drive growth in the OT space. Similarly, the people and easy HQ business segment, encompassing skills development and payroll outsourcing, faced revenue decline amid challenges with SOEs. Despite these setbacks, EOH remains optimistic about the growth potential in its international and digital segments, foreseeing continued expansion and market traction in these areas. The company also eyes opportunities in African markets, with a keen interest in Nigeria, Ghana, Kenya, and Uganda. Looking ahead, EOH aims to leverage its strengthened financial position and strategic focus on growth areas to drive profitability and market presence. By reducing debt, investing in key business areas, and expanding internationally, the company is poised for a transformative growth trajectory in the competitive technology landscape.