BCX holds steady
There has been increased IT spend from this sector as authorities take steps to counter the effects of the economic downturn.
The ICT service provider released interim results today, revealing a 7.9% growth in revenues for the period. However, operating profit for the period was down 30% and earnings per share slipped 30.9%. These decreases were put down to spending on the group’s revitalisation programme and foreign exchange movements that impacted its international earnings.
“Price sensitivity in this market has put operating margins under pressure, and this is reflected in BCX’s results,” says Frost & Sullivan senior ICT industry analyst Lindsey Mc Donald. “All ICT companies are feeling the impact, so BCX’s revitalisation programme, with its focus on weeding out inefficiencies and increasing margins, has come at the right time. That the group made this move at a relatively risky time has stood them in good stead.”
The group has changed its year end from 31 May to 31 August, so has released interim results for the past 12-month period. Audited results will be released for the 15 months to 31 August in November.
Mc Donald believes that BCX has done well to capitalise on opportunities in the public sector over the last twelve months, which was not a traditional area of strength for the group.
“This has brought results, as there has been a slowdown in spending from the private sector,” she says. “In the past, its competition has often taken more of the public sector pie, but its good news for BCX that they are generating more revenues in that area.”
The increased revenues from BCX’s international operations are also a positive sign. Although operating profit for the International Group was down 29.9%, this was severely affected by the strengthening of the rand.
“It’s particularly promising that the group’s Nigerian investment has shown good returns,” Mc Donald says. “BCX has not always been seen as a company with prospects in the rest of Africa, but there are significant opportunities on the continent that they are showing they have the capacity to exploit.”
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