Altech Autopage and Altech Node took a bite out of Altron's interim results for the six-month period ended 31 August.
Revenue decreased by 7% to R13.3 billion and earnings before interest, tax, depreciation and amortisation dropped by 69% to R241 million.
"Although Altech Radio Holdings and our IT assets performed very well on a comparable basis, the group continued to experience significant adverse effects from four areas of the business, namely: Powertech Transformers, Altech Multimedia, Altech Autopage, and Altech Node," says Altron CEO Robert Venter.
Altech Node continued to make operating losses, and this business will be closed effective 31 October, although the technology will remain within the Altron group.
Altech Autopage operated in a difficult market while the sale of its GSM subscribers was being finalised. Sale agreements were concluded with three mobile network operators for R1.5 billion. "We anticipate that all regulatory approvals will be achieved and migration of subscribers will be completed by February 2016," says Venter.
The Gauteng Broadband Network project, which is running on schedule with an increased scope, boosted Altech Radio's financial performance. Altron says some significant projects are in the pipeline.
Bytes UK, Bytes Secure Transaction Solutions and Bytes People Solutions were the stand-out performers in the IT division, it notes.
Powertech Transformers saw a further decline in Eskom orders, which resulted in an unfavourable production mix and an under-recovery in its factories. Altron is disposing of this business.
Altech Multimedia was affected by the delay in SA's digital terrestrial television migration. Although set-top box demand in SA remains at reasonable levels, the reduction in orders from the rest of Africa and the loss of the Samsung television assembly contract resulted in under-recoveries in its factory, says Altron. Action has been taken to right-size this business and consolidate its international operations.
Going forward
Venter says it crucial that Altron reposition. "We have commenced with detailed actions to execute on our new strategy. The plan will focus the group, leverage the competitive advantage that we have in the IT and telecommunications space, and limit our exposure to the manufacturing sector.
"In this regard, equity partners are being sought in the non-core businesses which will help us access new markets, technologies and capital. In some cases, an asset identified as non-core may result in an outright sale."
Altron is also implementing initiatives to reduce costs, including consolidation of its three head offices into one and expansion of its shared services.
"Altron's future-state will be a smaller, more agile group that is focused on its core IT assets. This will be a stable base from which to grow," notes Venter.
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