JSE-listed Altron, which had a tough year with margin pressure and losses in Africa, is still keen to tap into the continent's potential, but will revise its strategy off the back of expensive lessons learnt at its Altech subsidiary.
Altech has disposed of its African businesses, after incurring losses for several consecutive reporting periods. The group, Altron's largest source of revenue, said its year-end results were negatively impacted by impairments, a loss on disposal, and operating losses at its East and West African operations.
However, after selling those operations, the "significant operating losses" of R205 million will not recur. Altron CEO Robert Venter says the losses affected Altron's bottom line in its year to February.
Altron reported revenue 6% higher overall in the year to February, at R25 billion. It made an earnings before interest tax, depreciation and amortisation (Ebidta) profit of R1.7 billion from continuing operations, a 12% decline, while its discontinued operations made an Ebitda loss of R40 million.
Still keen
Venter says Altron still wants to earn about 20% of its revenue from Africa within the next three to five years, although it will now be harder to meet this target after Altech disposed of its African operations.
However, the company will revisit its strategy off the back of lessons learnt at Altech, says Venter.
Altech, which is focusing on its core activities, has taken active mergers and acquisitions off the cards for now, but will look at bolt-on deals, notes Venter. He says opportunistic deals will be considered.
Altech had been on the hunt for an acquisition to add to its Netstar offerings and grow the company geographically, possibly into Latin America. However, the entity put any deals to one side while it focused on sorting out its problems in Africa.
Altech recently disposed of its operations in East Africa to Liquid, in return for an equity stake, and has also exited its West African operations.
Bytes Technology Group is moving into Africa on the back of client expansion, and has won a R400 million deal from a bank to provide services in SA and 13 countries, says Venter.
Powertech also has spare capacity and is seeking to fill this through orders from Africa.
Bytes performed in line with expectations, coming off a high base. Venter says he expects a minimum growth at inflation level.
Powertech delivered disappointing results, especially in the cables group in the second half, due to reduced infrastructure spend and the impact of strikes. Venter notes the cable challenge may persist for a while, but the company has entered the renewable sector.
Venter says Altron already has a pipeline of more than R2 billion, with deals being awarded to units at each of its subsidiaries.
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