Rectron shows strong financial results for fiscal 2010

Mark Lu, Rectron Holdings CEO
South African-based IT distribution powerhouse Rectron, recently released its financial results for the fiscal year ending 30th June 2010. The company’s results have shown an increase of 8.41% in turnover to R1.486 billion and profits increased by 16.65% to R51.4 million which is more than double that of its six months results.

Strong financial management has decreased the cost of capital by R10.8 million together with a decrease of 9.8% in its administration and operating expenditure.

During the global financial crisis, the company continued to place more focus creating new customers and increasing the potential of existing ones by capitalising further on the investment made in the company’s infrastructure and automation systems which it says is paying off.

Although FY2010 has been a very challenging year in all sectors the company has experienced good growth in the mobile segment through its mobile strategy involving Gigabyte, ASUS, Samsung and Sony even though the company acknowledges that pricing and margins were severely under pressure during the year. The company has also seen that, contrary to popular belief, the desktop market has shown signs of growth.

Mark Lu, Rectron CEO says the desktop components business has been slightly down which is a reflection of the mobility replacement trend currently taking place. However, Lu says the industry does not expect to see any further drops in the desktop segment as most African markets in general are still showing small signs of recovery.

Lu adds that the company has also seen good growth in the retail sector as consumer electronics products continue to add to the increase in revenue although consumers have been spending less.

The company looks forward to the new financial year with a new perspective on its changing business within the country, he says. “This last year has been one of the toughest years to trade,” he acknowledges. “Margins have been under pressure, technology has become more commoditised and consumers were spending less.”

Lu says despite all these economic pressures, Rectron still managed to beat the recession by sound financial management, inventory optimisation and by focusing more on the channel. “We see that the South African IT market will soon start to adopt a European distribution model so we need to continue to focus on our business scale, operational expenses, as well as our customer breadth,” he concludes.