JSE listed Allied Electronics Corporation Limited (Altron) has on Wednesday (8 May) announced a 6% rise in revenue to R25 billion for the year ended February 2013, however, the group trimmed its dividend pay-out largely due to losses incurred by its subsidiary, Altech.
Earnings before interest, tax, depreciation and amortisation (ebitda) decreased 19% to R1.6 billion against the comparative year in 2012, and headline earnings per share decreased by 29% to 136 cents.
Altron declared a gross ordinary dividend of 60 cents per ordinary share, from 92 cents in 2012.
“Our overall results were impacted by operating losses from the Altech African operations and a disappointing performance from Powertech in the second half of the year. The good news is that Altech East and West Africa have been disposed of effective on 28 February 2013 and R151 million of ebitda losses will not recur in the current financial year,” said Altron chief executive, Robert Venter.
The remainder of Altech performed to expectation with Altech Multimedia, which includes the set-top box manufacturing Altech UEC, performing very well despite the on-going delay in the rollout of Digital Terrestrial Television, the group said.
Altech Multimedia has had success in expanding its customer base beyond MultiChoice outside of South Africa in areas like Germany, Turkey, Angola and Australia.
It has also extended the services side of the business to balance manufacturing and service provision. Altech Netstar and Altech Autopage Cellular provided steady results, Altron said.
Altron owns a 62% stake in Altech.
As with the last set of results, Bytes was the group’s top performer. Most of the businesses within the Bytes group performed well with the exception of the Xerox division of Bytes Document Solutions which experienced difficult trading conditions, Altron said.
“The IT industry is experiencing commoditisation which is putting some pressure on margins. The business has reorganised in the new financial year, realigning and combining businesses in order to trim costs, align business units and further improve customer service.”
“We will continue to look at niche acquisitions for Bytes in areas with specialised products and services which yield higher margins,” said Venter.
Powertech experienced lower demand from the infrastructure market in the second half particularly in the Cables division.
The building and construction sector continued to show no meaningful recovery albeit the latest statistics show preliminary signs of a gradual improvement which may have a positive effect in the current financial year.
Looking ahead, Altron said it would target cross selling opportunities throughout the group but particularly between Bytes and Altech which serve similar industries.
“Our capital allocation between businesses will receive careful consideration in order to extract maximum return on investment.”
Venter said that consolidation of the core businesses within Altech was a priority with a focus on extracting synergies between Bytes and Altech, targeting organic expansion into Africa and investing in the renewable energy and public sectors.
Coupled with this, Altron plans to enhance its existing portfolio with bolt-on niche acquisitions in services and IP intensive businesses which typically provide larger barriers to entry and higher margins.