East, West Africa weigh on Altech

JSE-listed Altech, which will publish its interim results later this month, says its results will again be affected by continued poor results from its African operations.

The group yesterday published a trading update indicating headline earnings and adjusted headline earnings per share are expected to be between 18% and 25% lower than last year, because of continued poor results from East and West Africa.

Headline earnings per share are seen by analysts as a key measure of a company's performance as they strip out unusual items. The rest of Altech's operations are performing "satisfactorily".

Impairments regarding Altech's East and West African operations, reflecting their poor results, are expected to lead to a basic earnings per share loss of between 303c and 310c, says Altech.

A year ago, Altech reported flat revenue of R4.8 billion and basic earnings per share 32% lower at 141c. Headline earnings per share were 156c, a 24% decline, while adjusted headline earnings per share were 19% lower, at 181c.

Altech has been battling with its East and West African operations for some time and has indicated it will sell out of West Africa, because its products are reaching maturity.

At the last full year, Altech said operations in East Africa experienced a tough trading period, with financial performance below expectations due to a number of challenges, including currency fluctuations, high inflation rates and interest costs, sharp drops in broadband pricing, and network instability due to fibre and undersea cable breaks.

The group has replaced top management and cut costs in a bid to turn the unit around. Earlier this year, Altech CEO Craig Venter said: "We are busy restructuring our East African operations into a more regional-focused business entity to provide regional unity and a single interface into key customers. This close collaboration between the regional operations is already having a positive impact on our business in the region."

As a result of the issues weighing on Altech's African operations, parent company Altron says headline earnings per share and adjusted diluted headline earnings per share for the half year to August are both expected to be between 5% lower and 2% higher.

Basic earnings per share for the period are expected to be between 95% and 105% lower because of the impairments.

A year ago, Altron reported revenue slightly lower at R11.5 billion. Basic earnings per share were 20% lower at 74c, while headline earnings per share lost 16% to 83c.

Altech's results should be released next Wednesday, while Altron expects to publish its numbers on 9 October.