Altron hit by recession

Local technology business Altron says the recession has had a significant impact on its latest set of results.

The company this morning published disappointing interim results for the six months ended 31 August 2009, with earnings taking a beating alongside a revenue crunch.

Altron CEO Robbie Venter says its Powertech subsidiary was worst hit by the recession over the half year. “Our group interim results came under pressure predominantly due to Powertech being impacted by lower demand levels and strong pricing pressures compared to the peak levels they experienced during the first half of last year.”

Powertech took an operating profit beating, declining 75% over the same period last year. The decline is a 180-degree turnaround for the company, which was Altron's growth leader last year.

The company's Bytes group revealed virtually flat results, growing revenue marginally. Venter says the subsidiary's 3% increase would have been higher if not for the stronger rand. Despite the decline, the South African arm of the business faced better results than its international operations, with revenue up 8% for the period.

Venter says the lower expenditure by both the retail and financial sectors showed in the group's IT operations. “The Bytes operating margin reduced from 5.4% to 3.5%, resulting in a 32% decline in operating profit and a decrease in EBITDA of 25%.”

Altech was Altron's best performing business, with stellar results for the period. The company has turned its growth focus to East Africa, where its investments seem to have paid off.

“In fact, Altech defied the recession by reporting very good results for the first six months, with operating profit improving by 17%, EBITDA by 19% and adjusted headline earnings per share by 13%. Altech's operating margin improved to a pleasing 10.1%, reflecting good profitability levels at most of its operations and its profitable recent acquisitions. In addition, this was aided by the elimination of the Altech NamITech SA losses following its sale earlier this year,” explains Venter.

Venter says the effects of the recession seem to be receding, saying all businesses have started to see an upswing in activity. “During the second quarter, we started to see a gradual improvement in our businesses, which is consistent with recent economic data that indicates that the bottom of the economic cycle may have been reached, with some signs of recovery.”

The second half of the year should show improved results over the first half, he adds.