Lesley Stones
8 October 2008
Johannesburg — TECHNOLOGY and telecoms holding company Altron has posted strong results for the past six months, but predicts tough times, making it focus on cost control and working capital.
CE Robbie Venter said global financial turmoil created trading uncertainty, and a slowdown in local home building due to high interest rates was hitting its Powertech division.
"We are looking at a phase of consolidation. Over the last 18 months we have made R3,5bn of acquisitions. The next six months are very much focused on making those operations perform. But if acquisitions become available and fit with our group it's certainly something we'd look at."
Altron revenue for the six months to August was up 19%, from R11bn to R13,2bn. Attributable profit jumped 45% from R450m to R654m, but headline earnings a share of 192c were up only 12% from 171c. Cash in hand was down by R1,1bn to R615m after acquisitions and dividend payments.
Venter was pleased with the growth. Altron practically doubled in size in the past two years, yet adjusted earnings per share climbed 15%. "Based on the global financial environment it would be naive to expect that trading conditions will improve in the next six months. They can only present more challenges, but we will manage our businesses accordingly," Venter said.
Working capital had to be managed carefully as customers would take longer to pay bills and inventory levels could rise if clients delayed spending.
In the past six months the Altech and Powertech subsidiaries increased revenue and profit growth. Altech had a solid rise in operating margin. The Bytes subsidiary saw good revenue growth, but operating profit margin slid from 6% to 5,4%, mainly inflicted by its systems integration business.
Bytes' Document Solutions division won new deals and renewed contracts with big customers. But its Xerox unit in the UK performed below expectation as tight economic conditions hit sales.
Powertech firms grew revenue 27% to R5,4bn, but operating margin fell a little. Powertech Transformers was a big contributor to growth, winning a R1,4bn, five-year deal to supply Eskom with a broad range of products. Eskom efforts to generate more electricity would benefit other Powertech divisions supplying equipment for that.
Altron telecoms subsidiaries would benefit from Africa's demand for voice and data services, and would capitalise on that from Altech's $75m acquisition of 51% of three Kenyan firms.
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