JSE-listed technology group Altech saw its profit fall for the six months ended 31 August 2010.
Releasing its interim results on Tuesday, the company reported a decrease in headline earnings per share to 206c from 292c a year earlier.
Operating profit came in at R361m from R479m in the previous comparable period, which analyst group Frost & Sullivan has described as “disappointing”.
Although certain market segments were affected by the global economic conditions, many companies within the group performed well; most notably Altech Fleetcall, Altech Card Solutions and recent acquisition, Altech NuPay, CEO Craig Venter said in a statement.
The company’s strong cash position and balance sheet still left it in a good position to take advantage of investment opportunities.
“The group believes that performance for the second six months will be much improved on the first half-year as certain adverse factors which were specific to the period will not recur.”
Looking to the future Altech would continue to diversify its income base within the technology, multimedia and information technology sector through globalisation, merger and acquisition activity and convergence opportunities.
“We have been highly acquisitive over the last 10 years, expanding the group significantly and implementing our strategy of a transition from a telecommunications and technology company to a converged services group,” Venter said.
This would remain the strategy, but for the remainder of the financial year the group would focus specifically on Altech’s transition to broadband and the globalisation of Altech Netstar and Altech UEC, he said.
Frost & Sullivan, meanwhile, has described Altech’s latest operating profit figure as “disappointing”. Operating profit margin of 7,6% was down from 10,2% a year ago.
“Many of Altech’s customers, both retail and corporate, continue to feel the impact of last year’s poor economic conditions, and this is reflected in Altech’s half-yearly result,“ says Frost & Sullivan analyst Protea Hirschel.
“A significant portion of its SA revenues are dependent on the mobile telecommunications market. Over the past year this market has seen lower subscriber growth rates and declining average revenues per user along with lower tariffs.”
Interconnection rate reductions have had an impact on the company’s least-cost routing business, too. And Hirschel says “falling margins on submarine bandwidth have also weighed on the company’s profitability in East Africa as this market has become more competitive”.
However, the group “remains well positioned to take advantage of growth opportunities”, especially in East Africa. — Sapa and TechCentral