Stronger rand hits Invicta H1 earnings
South African based industrial group, Invicta Holdings, today published its results for the six months ended 30 September 2024. The group grew revenue by 2 per cent whilst headline earnings per share declined by 14 per cent, impacted by the strengthening of the rand against major currencies. With the group’s strategy focused on expanding offshore, it has become more reliant on the major foreign currencies and it says that the forex adjustment reflects that relationship. CNBC Africa is joined by the CEO of Invicta, Steven Joffe.
Mon, 25 Nov 2024 10:52:01 GMT
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AI Generated Summary
- Mixed performance for Invicta Holdings as revenue grows by 2% while earnings per share decline by 14% due to rand strength against major currencies.
- Operational performance reflects a 11% increase in operating profit with challenges posed by high global interest rates impacting consumer spending.
- Company's offshore expansion strategy focuses on deepening market penetration and capitalizing on growth opportunities in the United States post-election.
South African-based industrial group, Invicta Holdings, released its financial results for the six months ending on September 30, 2024. The company experienced a 2% growth in revenue, but headline earnings per share took a 14% hit due to the strengthening of the rand against major currencies. This impact was largely attributed to the group's strategic focus on expanding offshore, making it more reliant on major foreign currencies. CEO Steven Joffe joined CNBC Africa to discuss the results. Joffe highlighted the operational performance, noting an 11% increase in operating profit before considering exchange rate movements. Despite challenges posed by the stronger rand, the group managed a 7% rise in sustainable operating profits. Joffe pointed out various factors influencing the results, including high global interest rates affecting consumer spending. Addressing foreign currency risk, Joffe outlined a hedging strategy and emphasized the importance of continued diligence in risk management. The company's expansion strategy revolves around deepening penetration in existing markets and capitalizing on growth opportunities in the United States post-election. Joffe expressed confidence in offshore growth, citing rapid expansion and a strong management team as key strengths. Financially, with R734 million in cash on hand, the company aims to reduce net debt by half by year-end, focusing on acquisitions and debt reduction. Noteworthy was the redemption of all preference shares, totaling R703 million, signaling a commitment to unlocking shareholder value. Looking ahead, Joffe highlighted uncertainties around the Trump presidency, particularly potential import tariffs impacting operations in China. Despite challenges, the company remains agile, having established a factory in Japan to mitigate risks. The outlook includes a focus on improving revenue growth in the coming months. Joffe underscored the company's commitment to navigating uncertainties and leveraging growth opportunities to drive sustainable performance.
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