IOCO plans debt reduction and potential acquisitions after profitable turnaround

iOCO's (formerly EOH Holdings) plans to reduce debt in the second half of its financial year, and it may consider share buybacks or acquisitions after that, co-CEO Thys Summerton said on Wednesday.

- EDWARD WEST

Summerton spoke in an online presentation after the technology group reported six consecutive months of profitability, and a focus on growth initiatives, strategic investments and working capital management which was expected to maintain the momentum of profitability for the rest of the year.

iOCO has been through a long period of "doing some things right and doing some things wrong".

When Summerton came to the group at the end of 2024 it was producing some R6 billion in cash a year, putting it among the most cash generative South African companies on the JSE, but its profits ranked it among the bottom of companies on the JSE.

He said they were pursuing a threepronged strategy to become more profitable, cost cuttting, most of which had already been done, with only the loss of less than 100 staff out of 4 500 currently empployed; decentralised management or "radical autonomy", the major executive appointments for which had been made; and capital and resource allocation.

He said they planned to reach a point, given the much improved free cash flow and profitability, to reduce debt in the second half to a ratio of 1:1 in terms of debt and earnings before interest, tax, depreciation and amortisation (EBITDA). Debt was R613m at the end of the interim period.

Over the longer term, he said they were confident that the group was capable of double-digit free cash flow per share growth off the 2025 base.

iOCO on late Monday announced its first profitable interim period in three years following a turnaround strategy that involved disciplined execution, strategic cost management, and a streamlined operating structure.