The success of the One Altron strategy has set the base for the Altron 2.0 strategy; however, some “tough” choices had to be made to reposition the company for its new growth path amid economic turmoil and a global pandemic.

The group, which has, over the past few years, focused on a vision of One Altron, is targeting a growth pace faster than that of gross domestic product, and has had to structurally adjust the company in order to achieve its new targets.

Despite the success of the One Altron strategy, the Covid-19 pandemic and its impact, combined with significant economic challenges, have necessitated some “difficult choices” by Altron, says group CEO Mteto Nyati.

“We came to the conclusion that a number of our operations needed to trim down to be much leaner,” he told delegates during the virtual Altron Capital Markets Day, noting that this had affected 650 employees.

He points out that it was also about the survival of the company, enabling it to emerge out of the challenging operating environment leaner, stronger and more relevant to its customers.

The structural changes, including a standardised and aligned digital workplace, will save the company about R100-million a year.

Further, the group concluded its restructuring of the head office in February, unveiling a fit-for-purpose operation in line with what is required in the new 2.0 structure and realising further savings of R80-million a year.

Altron will now turn its focus to the tripling of its operating income, delivering leading returns in the information and communication technology space, delivering best-in-class customer service, becoming the best place to work, maintaining a net debt to Ebitda ratio of less than 1 and becoming a responsible environmental, social and corporate governance company.

“Our goal is to triple our operating income over the next five years from a base of R451-million,” says Altron group CFO Cedric Miller.

The company is targeting organic revenue growth in the low double-digits and a reduction in working capital and debt levels.

A core focus will be the disposal of identified noncore assets that do not fit in with Altron’s three core segments, namely managed services, digital transformation and its own platform.

“We require each and every one of our operations to fit within those three segments,” Nyati comments.

The ambitions of low capital intensity will mean the selling of Document Solutions, Arrow and People Solutions.

“[The disposal] of those businesses will significantly reduce the amount of capital that is tied up in those businesses,” he explains.

A number of stakeholders have expressed interest in these companies, with five parties interested in Document Solutions, four in Arrow and 15 in People Solutions.

The company’s organic growth ambitions will be supplemented by carefully selected bolt-on acquisitions which are aligned to the growth areas in local and international geographies and will plug the identified gaps in solutions offerings.

In particular, bolt-on acquisitive activities will be narrowed to the addition of capabilities and offerings missing in Altron Security and to build on the offshore contributions of Altron Netstar.