Altron hopeful on future

The expected economic recovery did not filter through to its year-end results to February, but there are signs that the economy is starting to grow, says Allied Electronics Corporation (Altron).

The group this morning said revenue had decreased by 10% from last year, to R22.3 billion, while net profit moved down from R1.15 billion to R841 million. Headline earnings per share dropped 28% to 198c.

However, although some of the company's entities remained under pressure, its broad range of offerings and annuity revenue aided its results.

CE Robert Venter says the “benefits of our diversified portfolio of operations are reflected in our results, with the strength of the Altech annuity businesses partially shielding the group's performance from the challenges faced by Powertech and, to a lesser extent, Bytes”.

Altron says the “much speculated” economic recovery only started to be slowly felt in the last quarter of the year, as “muted” growth in some sectors of the economy was driven by commodity price increases.

“The signs of 'green shoots' at the half-year were premature, as the second half proved to be just as challenging as the first half,” says Altron. The company pointed to subdued property prices, lower levels of building, and a reduction in demand from mining companies as challenges it faced during the year.

However, the company says there have been positive signs in the first few months of this year, and growth seems to be more sustainable.

Altron says continued expansion in the mobile arena, particularly in Africa, provides growth opportunities for Altech, as well as Powertech's mobile infrastructure focused companies. The organisation also expects IT projects, which had been delayed during the recession, to start coming online soon.

During the year, the company focused on trimming costs and now believes it is positioned to “capitalise on what is likely to be a gradual recovery of the economy”.

“The many challenges we faced this year required stringent focus on cost controls, scaling our businesses appropriately for the new environment, managing working capital and extracting value from recent acquisitions. We are pleased that significant progress has been made in each of these elements, and while this will remain important, our primary focus for the future will now shift towards growth opportunities,” notes Venter.

Venter says the group is now ready to focus on externally driving growth, and he expects the development of broadband technologies to open up new opportunities for the group.