Bytes Technology Group saw three of its units report lower earnings before interest, tax, depreciation and amortisation (Ebitda), as the printing and imaging market slowed down and two large contracts from last year did not reoccur.
The group's half-year results were presented yesterday when parent company Altron reported its interim results for the period to August. Bytes again contributed the largest slice to headline earnings, at R117 million, or 46%.
Altron reported revenue up 11%, to R12.8 billion. However, write-downs at Altech's East and West African operations - which need to be carried on the income statement due to accounting rules - led to Altron's profit of R16 million in the first half of 2011 becoming a R293 million loss.
Bytes grew revenue 19%, although headline earnings per share only gained 7% due to margin pressure. CEO Rob Abraham explains that, according to the IDC, the printing, multifunction devices and photocopy market shed 10% of its value, and 27% less units were sold in the first six months in the calendar year.
Holding its own
This negatively affected its second-largest unit, Document Solutions, which saw revenue up 6%, to R1 billion, but Ebitda fell 24%, to R70 million. Xerox SA also lost a large customer, according to the results presentation.
Despite the market shrinking by almost a third in terms of volume, Bytes held its share, but this came at a cost as it felt margin pressure, says Abraham.
Systems Integration and Managed Solutions reported revenue and Ebitda down after a strong first half in 2011. Abraham explains there were two large deals that were inked in the first half of 2011 and did not recur this year. He says Bytes has won a few more contracts and he expects the effects to filter through in about a year's time.
The rest of the business performed well, adds Abraham. This includes units like Unisys Africa, People Solutions and its recent acquisitions. Bytes recently bought Alliance Business Solutions for an undisclosed amount.
Abraham adds there is currently a lot of international competition in SA, as offshore groups seek to tap into markets that are growing at a healthier rate. While there is still a lot of activity and bids going out, there is now more competition.
However, Bytes is in a healthy position and Abraham says he does not see the need to make any changes to units' current strategy, unless something happens outside of its control.
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