May 08, 2012
Cables, African impairments knock AltronBack
Construction|Engineering|Africa|Altron|Bytes|Eskom|R6.1|Africa|Kenya|Building|Equipment|Information Technology Subsidiary|Technology|Infrastructure|Robert Venter|Cables|Operations|Information Technology
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Group revenue rose 3% to R23.6-billion (R22.8-billion), but earnings before interest, taxes, depreciation and amortisation (Ebitda) fell 7% to R1.9-billion (R2.1-billion), while adjusted diluted headline earnings a share declined 15% to 206c (243c).
Following “substantial impairments”, the group incurred a loss after tax of R79-million, from a profit of R699-million. Following “substantial impairments”, the group incurred a loss after tax of R79-million, from a profit of R699-million.There were goodwill impairments of R412-million, property plant and equipment impairments of R235-million and intangible impairments of R300-million.
Most of the impairments related to Altech's East African business, which totalled R589-million, while impairments in West Africa totalled R242-million. Altech had decided to disinvest from West Africa, while a turnaround strategy was being pursued at Kenya Data Networks, where a new management team had been assembled.
The results were also impacted by an increase in the effective tax rate as a result of non-recognition of various deferred tax assets on losses in the underperforming operations.
CE Robert Venter said that parts of Altech and Powertech experienced challenging times, while its information technology subsidiary Bytes emerged as the group’s largest contributor. Bytes reported an 11% rise in Ebitda to R527-million, despite flat revenues of R6.1-billion.
Altech’s overall results were negatively impacted by significant impairments in the East and West African businesses. Revenue increased by 3% to R9.97-billion, but Ebitda declined by 14% to R919-million. “We are disposing of the West African business and we have taken significant remedial action in Altech East Africa,” Venter said.
Results at Powertech were negatively affected by its cables business. Overall, revenue increased by 6% to R7.5-billion, but Ebitda fell 7% to R500-million.
The cables unit was hurt by a poor performance from Aberdare International, caused by very difficult economic conditions in Iberia. Demand from the infrastructure sector, including from Eskom and South African municipalities, had been strong.
Venter said that numerous cost-cutting and rationalisation steps had been taken, but that the cables business would only recover once the building and construction sector turned.
Altron would continue to focus on organic and acquisitive growth opportunities in the current financial year.
However, Venter said special attention would also be given to “getting the currently underperforming businesses back on track”.
“Improvement in Altech East Africa is imperative,” Venter said, adding that the focus of the turnaround was on restoring network stability, improving customer relationships and integrating the Rwandan, Tanzanian, Ugandan and Kenyan businesses.
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