JSE-listed Allied Technologies (Altech) does not expect to see any growth for the full-year, despite assurances a few months ago that it did not intend breaking its decade-long growth record.
The company told shareholders on Friday, in a voluntary disclosure, that growth for the full year is likely to be flat. According to JSE rules, firms only need to tell shareholders when results will differ by 20% from the previous reporting period.
At half-year, Altech was hard hit by “certain adverse specific factors” that weighed on revenue and its operating profit margin. Revenue for the first six months was R7.8 billion, while operating profit was R361 million, a decline on the R479 million reported for the first half of its 2010 year.
Among the issues that plagued the firm during the first six months of its year were delayed orders at Altech UEC, delayed implementation of its fibre project in Rwanda, and a decline in Vodacom incentives at Altech Autopage, due to a clean-up of its client base.
When the company presented its results for the six months to August, in October, CEO Craig Venter was confident of reversing the trend in the second half of the year. Venter was buoyant about the company's year-end figures, saying Altech had reported positive growth for the past decade and “I don't intend breaking the record”.
Venter also expected the operating margin to recover to between 9% and 10% by year-end, which is on par with previous years. The listed entity owns companies such as Altech Autopage, set-top box manufacturer Altech UEC, vehicle tracking company Netstar and operations in West and East Africa.
Broken record
Altech has grown revenue, pre-tax profit and net profit for the past six years in a row, without fail, according to information on its Web site. However, the company's decade-long record of positive growth could now be broken in the year to February.
The unit, the largest in the JSE-listed Altron stable, expects the second half of the year to be an improvement on the first six months, but warns “it now appears unlikely that the group's results for the full financial year will show any growth on the results for the preceding financial year”.
“It is now clear that, due to continuing adverse global and local economic conditions, as well as currency volatility factors, trading conditions within the Altech group's operations are being negatively affected,” says Altech.
Last year, Altech reported full-year revenue of R9.2 billion, operating profit up 7% to R933 million and adjusted headline earnings per share 2% higher, to 605c. At the time, it said the directors were pleased with the results, “despite the slow global economic recovery”.
Altech's results are expected to be published on 20 April next year. Its share price closed flat at R62.95 on Friday, but was 95c, or 1.51%, down in early morning trade today at R62.
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