Despite a challenging economic environment, JSE-listed technology group Altron has delivered a strong set of results, with a 15% increase in operating profit, for the six months ended 31 August.
Announcing its financial results in a statement this morning, the group says despite its digital business taking a knock, operating profit from continuing operations increased to R549 million, driven by performance in the platforms segment, with headline earnings per share climbing 22% to 96c.
A tough trading environment in IT services led to a 1% decline in group revenue to R4.8 billion. Despite the decline, the company’s focus on higher margin annuity revenue streams resulted in further improvements in profitability, it says.
CEO Werner Kapp says: “I am pleased with this period’s strong financial performance in a challenging economic environment. I am particularly encouraged by the growth and returns in our platforms segment, which we continue to invest behind in line with our strategy. Our strong financial position and cash flow generation have allowed us to increase our interim dividend.”
Unit performance
Altron Digital Business faced a challenging half-year due to muted IT spending by major South African enterprises, according to the company.
Revenue declined 10% and the business posted an operating loss of R42 million. It says it has taken corrective action to return to profitability and remains well-positioned for an upturn in the IT services industry, with revised go-to-market strategies and enhanced sales leadership teams.
Netstar, the vehicle tracking and recovery business, continues to gain momentum, with subscribers up 11% to 2.1 million. Revenue grew 8% to R1.2 billion, and operating profit rose by 54% to R225 million, positively impacted by the change in depreciation policy, says the company.
“The South African operations delivered a very strong performance, with Netstar’s Global Fleet Bureau and the extension of the StarTag product range enhancing its value proposition beyond traditional tracking. While Australia faced some headwinds, the team has implemented corrective actions that are already showing positive results.”
Altron FinTech delivered good performance, with 24% revenue growth and a 20% increase in operating profit to R257 million, driven by growing demand from small and medium enterprise customers for its collections and payment platform, as well as strong rentals and sales of point-of-sale devices.
Altron HealthTech revenue remained flat at R201 million, with double-digit growth in platform licence fees offset by lower corporate project revenues for the period. Operating profit grew by 20% to R65 million.
“The encouraging adoption of data-driven services continues, including the recent launch of the oncology companion app, ThriveLink, assisting cancer patients with seamless care coordination and easing administrative burdens.”
Altron Security revenue increased 2% to R252 million, with good growth in software and managed services increasing annuity revenues. Operating profit increased 6% to R70 million.
Altron Document Solutions increased its operating profit by 65% to R33 million, despite a revenue decrease of 5% to R697 million. Altron Document Solutions has adapted well to changing market dynamics, developing its eco-range and digital solutions, leading to strong results as customers seek more cost-effective and secure ways to digitise, automate and manage business information.
Altron Arrow was impacted by the global slowdown in the electronic component distribution sector, with revenue falling 23% and operating profit falling 49% to R18 million.
Altron Security revenue increased 2% to R252 million, with good growth in software and managed services increasing annuity revenues. Operating profit increased 6% to R70 million.
Altron recently launched an AI factory, providing South African companies with enterprise-level AI infrastructure and services, while maintaining data sovereignty and regulatory compliance.
The platform is currently live with five launch customers, which include Dataviue, Lelapa AI and MathU.
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