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Altron turns the corner

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Although more work needs to be done, Altron's outlook is positive, says CEO Robbie Venter.
Although more work needs to be done, Altron's outlook is positive, says CEO Robbie Venter.

Altron's turnaround strategy is bearing fruit, as the group saw headline earnings per share (HEPS) swing from a loss to a profit for the six months ended 31 August, despite revenue decreasing.

Interim HEPS improved to 31cps compared to a loss of 64c posted in the prior corresponding period. Basic earnings per share (EPS) increased to 6c versus the loss of 151c a year before. Altron's revenue for the period, however, decreased by 14% to R11.4 billion despite earnings before interest, tax, depreciation and amortisation (EBITDA) increasing by 58% to R380 million.

CEO Robbie Venter says the interim results reflect the success of Altron's revised strategy to focus the group on areas where it has the resources, competence and skills to leverage its competitive advantage.

"We are beginning to see the positive results of refocusing the Altron group in line with our stated strategy. The results from the core operations have been pleasing, particularly in the context of difficult and uncertain local economic and political conditions.

"Furthermore, the successful disposal of Altech Autopage to the major South African mobile network operators and the sale of the majority equity interest in Aberdare Cables to Hengtong, along with other smaller disposals, has enabled Altron to reduce its debt by approximately R1.5 billion and restore the group to profitability," he says.

The JSE-listed company split its earnings into continuing and discontinued operations to allow shareholders to get better insight into the performance of core and non-core operations within the group.

The Powertech group, Altech Autopage and Altech Multimedia have all been classified as discontinued or non-core operations, while the continuing operations comprise the information technology and telecommunications businesses of the group.

Revenue for the core operations increased by 10% to R7.5 billion from R6.8 billion in the prior year, while EBITDA increased 18% from R378 million to R445 million. This resulted in the continuing operations generating a profit before tax of R253 million, double the profit of R126 million posted in the prior corresponding period. Headline earnings also improved to R183 million from R164 million, resulting in a 10% increase in HEPS to 54c.

Altron says the results of the non-core operations showed a significant improvement from the previous period as a result of last year's restructuring.

"These factors have resulted in a significant reduction in the losses generated from the discontinued operations."

While revenue declined as a result of the sale of Altech Autopage and the disposal of Aberdare Cables, EBITDA losses decreased from R137 million in the prior period to R65 million in the current period. The main improvement came out of the Altech Multimedia business which is now generating positive EBITDA as a result of certain management interventions.

"Although more work needs to be done in terms of continuing to improve and grow our core operations and completing the remaining asset disposals in our non-core operations, the outlook is positive with respect to getting the group back on a path of profitability and growth that is sustainable and future-proof," Venter adds.

Earlier this year, the troubled technology group reported it lost over R1 billion in total revenue for the year ended 29 February. Revenue also declined by 4% to R26.6 billion.

Altron, through its principal subsidiaries, invests in the telecommunications, multimedia, information technology and power electronic industries.

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