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Altron FY earnings hit by ‘disappointing’ year

Altron CEO Robert Venter

Altron CEO Robert Venter

Photo by Duane Daws

13th May 2015

By: Natasha Odendaal

Creamer Media Senior Deputy Editor

  

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JSE-listed Allied Electronics (Altron) aims to “restructure and refocus” after emerging from a year of challenges that had significantly hampered its financial performance in the period to February 28.

Altron CEO Robert Venter said a “fundamental review” was under way after the faltering performance of several units sent headline earnings a share plunging 50% to 94c for the year under review.

The company swung to a loss of R60-million for the year under review, from a profit of R775-million in the prior financial year.

Earnings before interest, taxes, depreciation and amortisation (Ebitda) contracted 23% to R1.4-billion, while revenue remained flat at R27.6-billion.

“It was a disappointing year,” he said, pointing out that “tough” decisions needed to be made to improve Altron’s performance after various interventions arrested the decline.

Profitability in Altron’s Power division was adversely affected by a marked decline in orders – from historic levels of 12 to 15 transformers a year to two in the year under review – from State-owned power utility Eskom, compounded by strike action in July by the National Union of Metalworkers of South Africa (Numsa), which had impacted the manufacturing businesses.

The cables unit, however, emerged as a star performer and gained traction in new markets during the 12 months to February.

Altron Power's revenue remained flat at R8.3-billion, while Ebitda plunged 43% to R220-million. The division reported a headline loss of R9-million for the year, compared with headline earnings of R77-million in the prior year.

The headline earnings of Altron’s TMT division, which housed its telecommunications, multimedia and information technology businesses, declined 19% to R461-million.

The division, which had been hit by a tough market and ongoing mobile termination rate reductions, leading the parent company to put Altech Autopage up for sale, reported a 16% decline in Ebitda to R1.2-billion and static revenue of R19.4-billion for the year.

TMT’s other units, including Altech Netstar, Bytes Systems Integration and Altech Radio Holding performed well during the 12 months to February.

The subpar performance of the Altech Node to the retail market had resulted in Altron seeking alternative opportunities and routes to market for this product, as well as potentially teaming up with a multinational company.

“Besides the effect of the Numsa strike, the multimedia businesses in Altron TMT were also affected by lower international orders as a result of a delay in African digital terrestrial television (DTT) migration,” Venter added.

The business’ order book, however, strengthened significantly after year-end and the South African DTT roll-out made progress.

“We need to focus and streamline our group, which will mean selling off some noncore assets and adapting our offering to our customers,” he said.

The company was in the process of reviewing core and noncore businesses and several acquisitions and disposals had already been made.

In the year under review, Altron acquired Webroy, Fleetpro and Celtrac, as well as the 27% of Bytes South Africa it did not already own and the remaining 50% less one share equity interest in Altech NuPay.

It also disposed of LaserCom, Bytes UK and its retail ATM base.

Edited by Creamer Media Reporter

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