JSE-listed Allied Electronics (Altron) bolstered headline earnings per share in the year to February, despite a decline in operating profit at its largest operating entity, Altech.
The company this morning published its year-end results and said revenue gained 2% to R22.8 billion as SA's economic recovery failed to completely filter through to the sectors in which it operates.
However, several cost-cutting initiatives have benefited the group, as earnings before interest, tax, depreciation and amortisation (EBITDA) increased 6%, to R2.1 billion. Headline earnings per share, a key indicator of performance, grew 15%, to 228c.
“Overall, we are pleased with the performance and resilience of the group. We have shown double-digit growth even though trading conditions were challenging in a number of our key markets,” says CEO Robert Venter.
Venter adds Altron has stripped costs to a minimum. “This puts us in a good position to take advantage of a further upswing in the economy.”
Mixed bag
Altron was buoyed by a “marked increase in the contribution” from wholly-owned subsidiaries, Powertech and Bytes, as both units improved profitability. Its largest subsidiary, Altech, had a difficult year and reported decreased operating profit, at R787 million from R933 million a year ago.
Altron's smallest unit, Bytes, grew revenue 2%, to R6.1 billion, and EBITDA by 21%, to R474 million. The unit turned around entities that had previously made losses and cut costs, which bolstered profitability.
Bytes Systems Integration, Bytes Software Solutions in the UK, Bytes Managed Solutions and Bytes Healthcare Solutions achieved record years, says Altron. Bytes is expected to continue to perform well, with market conditions likely to strengthen further, says Robert Venter.
Powertech, its second-largest entity, saw revenue 2% lower, at R7.1 billion, but cost-cutting resulted in EBITDA increasing 27%, to R539 million.
The unit's transformer business benefited from increased demand from municipalities and Eskom. Powertech Cables' revenue increased due to higher copper prices, and its systems integrator businesses delivered pleasing results after various new contract wins.
Powertech's cost-efficiency initiatives will continue in the year ahead, but a recovery of the building and construction sector is necessary in order for the cable business to return to acceptable levels, Venter adds.
Altron declared a 108c a share dividend, a 20% improvement on last year. Its share price was higher in early morning trade, at R29.26, a 46c or 1.6% gain. Its 52-week high is R29.99, which it hit on 11 November, while its 52-week low was R22.93 on 7 July.
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