South Africa’s Faritec targets profit
Faritec's new CEO has set himself the challenge of turning the loss-making company around by June next year.
CEO Fanie van Rensburg says the company should report a profit – however small – in the year to June 2010. He also expects the company to break even by the time it reports its half-year results to December. “I'm bullish, but I can see what is happening in the organisation.”
Van Rensburg concedes that he has set himself a difficult target. In its most recent results to June 2009, the company reported a slide in revenue from R1 billion, to R727 million, and operational losses led to a loss per share of 48.1c, compared with a gain of 11.3c in 2008.
The company said – at the time – that the disappointing results were due to a “rapid decline in sales” and its high cost structure. However, Van Rensburg says the company has restructured, and refocused. “If I can't get it to be profitable by the end of the year, I've missed something.”
In the next three to five years, Van Rensburg also expects the company to pay out a dividend – something it has not done since listing on the JSE in November 1998.
After a slew of resignations that left the company without a CEO and CFO, it has now also accomplished putting a management team in place. From 1 August, Arvind Gupta was appointed financial director and Van Rensburg was appointed to the helm of the company.
“It's been quite hectic,” says Van Rensburg. “Ten weeks sounds like a long time, but it has gone by like the last hour has.”
Shoden injected R20 million into Faritec earlier this year, for which it bought a 51% stake. Another R29 million was invested by shareholders after a rights offer. Together, these amounts gave the company the cash it needed to continue operating.
Since then, Faritec has shifted focus and is now concentrating on servicing the data centre market. Van Rensburg says it has also gotten out of low-margin businesses that were putting a strain on cash flow.