Listed electronics company Altron has earmarked Africa as one of its top three growth prioritises. It expects to invest about $20 million a year, over the next three years, to grow revenue from the continent.
The company's about R400 million capital investment will be spent through subsidiary Altech, which sees Africa as a key growth driver. However, Powertech and Bytes will also expand into the continent on the back of their current clients.
CEO Robert Venter says Altron, which yesterday reported revenue 3% lower, at R11.7 billion, in the first half of the year, is shifting its focus outside the company to find ways of growing income. He says Altron has been through a two-year consolidation period and now needs to find growth outside the group.
Venter says revenue earned from its African operations accounts for 9% ‑ or R1.95 billion - of Altron's total revenue for the year to February. He says the company wants to garner 20% of all its revenue from the continent in the next five years.
Altron is already a “significant player” on the continent, which offers “great” opportunities, says Venter. Altron has a presence in several African countries, including Kenya, Namibia, Nigeria, Botswana, Tanzania and Uganda, through units in its three subsidiary companies.
Growth possibilities
Venter cites research by the McKinsey Global Institute, which says Africa's collective economies will be worth $2.6 trillion in 2020, up from $1.6 trillion in 2008.
“No one can argue against the opportunities that our continent offers us,” says Venter. He says, however, that the company's expansion plans are limited to sub-Saharan Africa as North Africa is culturally different and a competition ground for European countries.
Venter explains that Altech will continue to expand in East and West Africa, where it currently has operations, and its significant capital investment will continue.
He says the company will spend about $20 million a year for the next three years on infrastructure in East Africa. Altech operates broadband provider Kenya Data Networks in the region.
West Africa will also be the recipient of investments, although this will be at a lower level than East Africa, he adds. The company is focusing on rolling out its payment solution in West Africa and will soon produce cards for Visa, Venter notes.
Go to market
In addition to Altech's investment, Powertech and Bytes will also expand further into the continent. However, says Venter, these companies will focus on growing their distribution channels off the back of current customer demand.
He adds that neither subsidiary will invest in manufacturing facilities outside of SA, as the company believes it has sufficient facilities in SA. In addition, says Venter: “We want to create jobs here.”
Bytes' and Powertech's two-year acquisition drought is also at an end, and Bytes is actively seeking a company to buy out in the UK to merge with its operations in the European country. Powertech aims to add new offerings to its basket of products.
Powertech saw revenue slow by 5% during the half-year, to R3.8 billion, but adjusted headline earnings leapt 63%, to 98c, due to operational efficiencies. Bytes also saw an improvement in adjusted diluted headline earnings, which moved up 28%, to 91c. Revenue was 7% lower, at R3.14 billion.
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