Tough Economic Times Halve SA’s Tech Firm Ansys’ Profit Growth

 Ansys CEO, Teddy Daka, says that 2018 results demonstrate the group’s resilience in the face of difficult macroeconomic conditions, which saw several large clients either postpone or cancel orders during the reporting period.

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Teddy Daka, CEO at Etion
Teddy Daka, CEO at Etion (Photo Credit: Etion)

Profit growth at South Africa’s diversified digital technology group Ansys halved in the year ending 31 March 2018, underlining tougher operating conditions as some of its large clients either postpone or cancel orders.

The group, which recently rebranded as Etion, posted a 50% reduction in headline earnings per share (HEPS) to 7.29 cents a share. HEPS is South Africa’s main profit gauge.

Ansys reported a 46% decline in EBITDA (Earnings before interest, tax, depreciation and amortisation) to R60.7 million in the year versus R113.1 million in the previous year.

Ansys CEO, Teddy Daka, says that 2018 results demonstrate the group’s resilience in the face of difficult macroeconomic conditions, which saw several large clients either postpone or cancel orders during the reporting period.

“They also reflect its successful efforts to improve margins, its stringent cost management measures, and its commitment to delivering meaningful value for its clients through an integrated and expanded solutions-based offering,” he said.

“While we anticipate that economic conditions will not improve markedly during the current period, we foresee increased demand in all four of our solutions-focused business units: Original Design and Manufacturing, Safety and Productivity Solutions, Digital Network Solutions and Cyber Security Solutions.”

Ansys has recently restructured and rebranded to create an enhanced platform for future growth.

Original Design Manufacturing division has delivered a 40.5% rise in profit to to R31.5 million versus R22.5 million in 2017.

The safety and productivity solutions business experienced a decline in both revenue and profits in 2018. Supressed economic activity and flat commodity prices continued to impact on transport volumes at major clients which, in turn, led to a lower number of orders resulting from the deferment of infrastructure upgrades and replenishment of rolling stock. The division reported a  23% decline in revenue to R77 million.

The telecommunications segment experienced a significant slowdown in the roll-out of FTTH (Fibre-to-the-home) by some of the network operators, following the upsurge in demand in the previous financial year.  As a result, revenue dropped by 38% to R266.4 million.

Transitioning from its heritage as a provider of products and services to specific market sectors, the company has repositioned itself as a full-service provider of digital technology solutions that can be used both within the sectors it already serves as well as in new market sectors.

To reflect this, the group is now called Etion, a name which reflects its core ethos of innovation, energy and action.

“Under the new brand name, the group is strongly positioned to take advantage of new opportunities as the digital revolution gains momentum both locally and internationally,” says Daka.

Etion’s vision is to create, digitise, connect and secure both generic and bespoke digital technology solutions to improve the safety, productivity, connectivity and cybersecurity of its customers. It aims to do this by creating and leveraging off its own IP and by strengthening its customer-focused approach to doing business.

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