JSE-listed Allied Electronics (Altron) has transformed itself into a “markedly different” entity over the past 18 months, with the firm now seeing positive progress after getting its strategy back on track during the first half of 2016.

In the six months to August, the company pulled its earnings out of the red, with basic earnings per share (EPS) increasing to 6c, compared with a basic loss per share of 151c during the corresponding period last year.

The company also turned around its headline loss per share of 64c reported in the first half of last year to positive headline earnings per share (HEPS) of 31c in the six-month period under review.

“We are beginning to see the positive results of refocusing the Altron group in line with our stated strategy. The results from the core operations have been pleasing, particularly in the context of difficult and uncertain local economic and political conditions,” Altron CEO Robbie Venter said on Wednesday.

Unpacking the group’s performance at its financial results presentation in Sandton, Venter said the interim results reflected the success of the revised strategy.

Overall, group revenue during the first half of the year contracted 14% to R11.4-billion, owing to the exit of noncore assets, while the half-year earnings before interest, taxes, depreciation and amortisation (Ebitda) surged 58% to R380-million.

Stripping out discontinued or noncore operations, including the Powertech group, Altech Autopage and Altech Multimedia, the continuing operations achieved a 10% increase in HEPS to 54c after increasing headline earnings from continuing operations to R183-million in the interim period under review, from R164-million in the prior corresponding period.

Revenue for the core operations during the six months under review increased 10% to R7.5-billion, while Ebitda increased 18% to R445-million and profit before tax doubled to R253-million.

“During the review period the group's core information technology and telecommunications businesses have produced a pleasing performance in what remained challenging macroeconomic conditions,” Venter commented.

Altron’s strategic repositioning continued to make good progress, with exposure to the manufacturing sector reduced and the group’s exit from noncore assets.

Group debt had been reduced by R1.5-billion owing to the proceeds from the successful disposal of Altech Autopage and the majority equity interest in Aberdare Cables, along with other smaller disposals.

The sale of Aberdare Cables was concluded in June, with gross proceeds of R910-million received in June and July. The sale of Altech Autopage was concluded in February, generating proceeds of R1.1-billion.

Satisfactory progress is being made on the remaining noncore assets.

While the noncore businesses continued to experience difficult trading conditions, the group substantially reduced the losses emanating from the embattled units.

The sale of Altech Autopage and Aberdare Cables led to a 40% reduction in revenue to R3.9-billion during the six months to August 2016. However, the company had narrowed its losses before interest, taxes, depreciation and amortisation from R137-million in the prior first-half period to R65-million in the current period under review.

“The main improvement came out of the Altech Multimedia business, which is now generating positive Ebitda, while the Powertech businesses saw a marked decline from the prior corresponding period,” Venter noted.

He expected more improvements during the second half of the year, with the disposal of the remaining noncore assets and the release of capital to further strengthen the balance sheet and enable further investment into the core businesses.

“Although more work needs to be done in terms of continuing to improve and grow our core operations and completing the remaining asset disposals in [terms of] our noncore operations, the outlook is positive with regard to getting the group back on a path of profitability and growth that is sustainable and future-proof,” Venter concluded.