Earnings for the first six months of the year will be lower, as subsidiary Altech's East African operations did not perform as expected, says JSE-listed Allied Electronics Corporation (Altron).
Altron, which expects to publish its results on 4 October, says headline earnings per share are expected to be between 14% and 18% lower for the six months to August.
Adjusted diluted headline earnings per share will drop by between 11% and 15%, while basic earnings per share are anticipated to decline by between 18% and 24%. Altron says basic earnings per share have been affected by goodwill impairments relating to Altech's East African operations and Bytes' NOR Paper.
A year ago, Altron reported revenue down 3%, to R11.7 billion, because of a weak performance from Altech. Net profit improved 3%, to R417 million, and basic earnings per share jumped 21%, to 93c, while headline earnings per share grew 6%, to 99c.
Altech, which will publish its interim results next week, is expected to report headline earnings and adjusted headline earnings per share lower by between 15% and 25%. The company says basic earnings per share are expected to be between 25% and 35% lower.
Not so good
Altron, which owns a majority stake in Altech, says the unit's performance post year-end has “not improved to the extent anticipated”, mostly because of continuing challenges in its East African business, which impacted profitability. Its other units recorded “pleasing growth”, says Altron.
In April, Altech CEO Craig Venter said operating profit had been hampered by its East African operation, which impacted its margins. However, he was confident the company would claw back its operating profit during the current financial year.
Venter said the issues that plagued East Africa were behind it and it would return profit of between R150 million to R190 million by the end of the year.
Mixed bag
Altron says Bytes continued to perform well in the first half of the year, producing results ahead of expectations and achieving good growth in all areas of its business.
Bytes' growth is mostly because of improved corporate IT spend and it was awarded “certain key contracts”.
Powertech's results were negatively affected by its cable businesses, which continued to face difficult times with slow demand in a highly-competitive market; especially in the local building and construction sector and at its offshore Iberian operations, says Altron.
The unit was also impacted by a nationwide strike in July, notes Altron. However, the rest of its operations exceeded expectations, because of improved efficiencies and through taking advantage of available growth opportunities, it adds.
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