EOH expects gross profit margin to improve over the full year despite lower sales in the second half of the year

The multinational information and communications technology services company EOH said it expects an improvement in its gross profit margin of between 4% and 6% for the fiscal year ending July 31.

While the group’s total turnover in the second half of the year was negatively impacted by the prevailing economic conditions, the group remains focused on the quality of results.

The total revenue generated by iOCO activity in the second half of the year was down due to sales of equipment still under pressure due to the impact of Covid-19 and the migration of customers to cloud alternatives.

The iOCO segment continues to post positive operating income and earnings before interest, taxes, depreciation and amortization (EBITDA) for the second half of the year, largely driven by the iOCO Services cluster, in particular Digital Industries which has seen significant growth in its Internet capacity. items.

“The iOCO activity has experienced positive momentum with strong traction in customer renewals and the recently mobilized re-entry strategy into the public sector generates value with a solid pipeline.

“The signing of new multi-year annuity agreements between private and public sector clients is proof of iOCO’s position as the nation’s leading end-to-end technology solutions provider,” said the CEO of EOH Group. Stephen van Coller notes in a pre-closing business update to shareholders.

The group’s Nextec activity continues to execute its recovery strategy, with sales having held up in the second half of the year despite difficult economic conditions. The Nextec People solutions business generated solid operating income and EBITDA in the second half of the year, with improved margins thanks to efficiency gains and tight cost control.

However, Nextec’s infrastructure solutions business remained under pressure characterized by contract delays in consulting services mainly in municipalities and the construction, water and energy sectors.

“Nextec’s activities that remain at the heart of EOH are self-sufficient from a liquidity point of view,” says Van Coller.

EOH continued to prioritize a cost structure appropriate for the business, agile and responsive to changing market conditions. As a result, the group expects to post positive operating income and EBITDA for the full year.

“Today’s OH&S has emerged from an exceptional period characterized by massive uncertainty. We have built a sustainable business with clear alignment and direction enabling us to better serve the more than 5,000 corporate clients, government and citizens of South Africa with the technology and digital activation that are critical to the future success of our country.

“We are now positioned to develop our international presence in the UK, Europe and the Middle East. Our recovery plan remains on track and is based on stable revenues and quality profits. Whether we provide end-to-end technology solutions, infrastructure solutions or human solutions, we deliver on our stated brand promise, which is to solve for our customers every moment, ”he said.

EOH’s international operations in the Middle East, UK and Europe remain “exciting” platforms from which to pursue exponential growth through its application development, security and cloud solutions.

In addition, these geographies offer opportunities for EOH’s intellectual property platforms and potential strategic partnerships in the country.

The group’s recovery strategy, focused on restoring credibility, increasing transparency and improving liquidity, remains on track despite persistent challenges in the local and global environment. By focusing on these priorities, EOH’s new board and leadership team broke with the past and succeeded in rebuilding a sustainable organization with clear alignment and direction.

The general operating environment in South Africa remains extremely difficult. The third wave of Covid-19, the ongoing power cuts and the significant impact of looting and violence have all taken their toll on the country’s already fragile prospects for economic recovery and investor confidence.

EOH’s Board of Directors and Management Team have addressed individual challenges over the past six months by activating a clear vision through consistent communication and being proactive with quick and thoughtful decision making. Building resilience across the organization has been an ongoing imperative.

In addition, the priorities for fiscal 2021 have been to continue to focus on quality profits, cost reduction and resolution of the group’s significant legacy debt and inefficient capital structure.

EOH has also focused on improving its end-to-end technology solutions with next-generation offerings such as application development, security, automation, robotics and data analytics, which further enhance again the Group’s role as a partner in key technological solutions for leading companies. .

Events of the past few weeks have shown that business, civil society and government urgently need to come together to find a sustainable way forward for South Africa, says EOH.

It is in this spirit that the group delivered 6,000 ready meals and 24 tons of groceries to EOH staff in areas affected by looting and violence and provided 500 employees with trauma support.

“Our goal at EOH is to Solve, and with that as our top priority, we will not only continue to be the technology partner of choice for our customers, but we will also ensure that we play a leading role in being a force for good in South. Africa.

“I must add how very proud I am of everyone at EOH who has gone the extra mile during this difficult time in South Africa to demonstrate that we stand in solidarity with those in our society who need our help the most.” , said Van Collier.