Altron reports interim earnings jump

Technology group Altron on Monday (24 October), published its interim financial results for the six months ended  August 2022, showing a 15% rise in revenue to R5.3 billion.

Altron Group chief executive, Werner Kapp, said: “As a group, we delivered 15% revenue growth, operating income growth of 57%, while decreasing our net working capital by R47 million. This equates to headline earnings per share (HEPS) growth of just over 460% for the period.

“Our net debit as a ratio of EBITDA remains consistent, indicating that we have managed to retain a healthy balance sheet during this period while generating higher revenues and operating income.”

Key highlights

• Revenue up by 15% to R5.3 billion
• Net profit after tax improved by 420%
• HEPS increased >460% to 34 cents per share
• Continuing operations HEPS increased >240% to 41 cents per share
• Dividend increased to 16 cents from 7 cents year-on-year, up >125%
• Continuing operations revenue up 21% to R4.6 billion
• Continuing operations net profit after tax of R144 million up >240%

Altron is in the advanced stages of the disposal of its banking business from Altron Managed Solutions. In the first half-year, Lawtrust recorded an EBITDA contribution in excess of the original business case, showing that it has been successfully integrated into the Altron Security business.

 “We are not immune to the climate of uncertainty, global supply chain constraints and inflationary pressures that all of us are subjected to daily. The continued global supply chain shortages, which result in longer lead times, inflated prices and a shortage in electronic components impact revenue pressure in our Digital Transformation segment, resulting in margin squeeze due to increased prices,” said Kapp.

Altron said that load shedding, high inflation and currency depreciation impacted both the demand and supply side of the Netstar business.

The conflict in Ukraine and the prolonged macroeconomic effects of the pandemic have influenced the shape of local and global economic recovery. A surge in general inflation driven by increased fuel prices, the effects of the floods in Kwazulu-Natal and the increased frequency of load shedding have all contributed to the decline of an already fragile local economy, it said.

Netstar’s revenue of R909 million is 8.7% up from the prior year, however a change in sales mix and increased GSM costs to counter the impact of blackouts due to load shedding has had an adverse impact on profitability, Altron said.

Altron FinTech’s revenue of R542 million is 35.5% up on the prior year, while its operating profit of R132 million grew by 71.4% reflecting enhanced margins.

The Digital Transformation segment’s revenue of R1.37 billion, which includes the contribution of  Lawtrust, acquired on 1 October 2021, is up 25.7% from prior year with an operating profit of R71 million representing a growth of nine times compared to the prior year, the tech group said.

The Managed Services segment achieved revenue of R1.36 billion, which is 16.6% ahead of prior year, whilst generating an operating profit of R21 million compared to a R9 million loss in the prior year. Altron Managed Solutions’ revenue of R900 million is 17% ahead of prior year and its operating income of R19 million is up from its prior year loss of R5 million.

 “We have some exceptional assets across our business segments that are market leaders in high growth areas, our performance in the first six months despite tough trading conditions is a testament to that. Altron is an iconic South African company with great assets that can enhance the Digital Transformation journey of our customers and touch the lives of many South Africans,” said Kapp.

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