Rand knocks Mustek earnings
Rand volatility will hit Mustek’s earnings in the financial year ended 30 June 2012, the computer assembler and technology distributor told shareholders on Friday.
For the year, Mustek’s headline earnings per share are expected to be between 15% and 25% lower than the headline earnings of 89,39c in the previous year. Basic earnings per share are likely to be between 10% and 20% lower.
“Mustek uses the rand/dollar spot rate at the beginning of each month to determine its selling prices, with adjustments made during the month should the exchange rate change substantially,” the company says. “Inventory is accounted for at the exchange rate at the time when risks and rewards transfer to the company, and accounting standards do not allow the fair valuation of inventory but require the corresponding foreign accounts payable to be stated at the closing spot rate.
“As long as this is the case and the rand remains as volatile as it is currently, reported earnings will be in line with the volatilities of the rand.”
Included in profit from operations is R47m related to realised and unrealised foreign exchange losses. In 2011, the company made R20,6m in forex profits.
Despite the dip in earnings, Mustek has reported robust top-line growth, with turnover increasing to R4,1bn, up 18,2% in the 2011 financial year.
The company assembles Mecer-branded PCs and laptops and also distributes products on behalf of companies such as Brother, Epson, Acer, Lenovo, Toshiba, NEC, Huawei and Fujitsu. Its share price was trading up by just under 1% at lunchtime on Friday. The counter has risen by 17,2% in the past 12 months. – (c) 2012 NewsCentral Media