JSE-listed Allied Electronics (Altron) says its electrical engineering subsidiary Power Technologies (Powertech) has gained momentum in terms of its entry into the renewable-energy sector over the last year.
The firm, which had eyed South Africa’s Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) as a strategic area for growth, had secured R150-million in orders for the service and supply of renewable-energy solutions for round one REIPPPP projects, Altron CEO Robert Venter said on Wednesday.
Speaking to Engineering News Online, he said Powertech would supply transformers, cables and industrial and system integrators to the turnkey contractors of the large solar and wind project bidders over the next few years.
A total of 47 projects, valued at R46-billion and accounting for 2 400 MW power capacity, were approved during the first two REIPPPP bidding rounds.
The first 28 projects have moved towards construction, while the implementation and power purchase agreements with the 19 bidders in round two of the REIPPPP would be signed this week.
The third bid window was also expected to close this week.
The company aimed to keep its focus on new greenfield projects – particularly rail and energy – as Venter believed they were key growth drivers for Altron.
Besides the new opportunities emerging in the renewable-energy sector, there was increased demand from the transport sector, as State-owned Passenger Rail Agency of South Africa (Prasa) and State-owned Transnet embarked on asset renewal programmes.
The firm hoped to gain some traction in supplying key contractors in Prasa’s fleet renewal programme during the next financial year, as tenders for the supply of rolling stock closed later in the year.
Prasa operated a fleet of 4 638 coaches – 90% of which were procured in the 1950s.
The passenger rail company was pursuing a R123-billion recapitalisation programme to add 7 200 new metro coaches by 2035.
Transnet was also undertaking a multibillion rand, multiyear replacement and upgrade programme for its own fleet.
Despite a 6% rise in revenue, from R23.6-billion in the year to February 2012, to R25-billion for the year under review, Altron’s earnings declined as subsidiaries Powertech and Allied Technologies (Altech) underperformed.
Powertech operations, particularly the cables business, had experienced a “very challenging year”, while Altech recorded trading losses on its East and West African operations.
Earnings before interest, tax, depreciation and amortisation (Ebitda) decreased by 19% from R1.9-billion in 2012, to R1.6-billion in 2013.
The group recorded headline earnings a share of 136c for 2013, down 29% from 191c in the prior year. Altron also reported a basic loss a share of 94c for the year under review, compared with basic earnings a share of 55c in 2012.
Altron moved into the red, to the tune of R428-million for 2013, compared with a profit of R16-million in the prior year.
Altech, which achieved a 5% increase in revenue to R10.4-billion, but reported a 17% drop in Ebitda at R765-million, disposed of the loss-making assets, effectively cutting R204-million – R39-million in the West African and R165-million in the East African operations – of the operating losses going forward.
However, Powertech did not have such a “cut and dried solution”, with rationalisation and consultation under way, and restructuring efforts to reduce costs and refocus various businesses would only bear fruit in the second half of the new financial year.
While Powertech’s revenue increased by 2% to R7.6-billion during the year to February 2013, Ebitda decreased by 42% to R288-million. Headline earnings for the Powertech group fell 99% to R1-million.
Altron subsidiary Bytes, however, had been “the bright spot” of the year, with its steady growth off a high base expected to continue, Venter noted.
While Altech and Powertech were “recovery stories”, Bytes would remain a growth story.
Bytes achieved a 15% increase in revenue to R7-billion, while Ebidta rose 1% to R531-million during the year under review. Headline earnings for the Bytes group remained flat at R253-million.