Altron, the JSE-listed group that is repositioning itself exclusively as an ICT sector player as part of a turnaround plan, will finalise the disposal of non-core assets by the end of its 2018 financial year.
Group CEO Mteto Nyati, speaking to journalists in Johannesburg on Tuesday, said Altron will dispose of decoder manufacturer Altech UEC and electrical business Powertech Transformers by the end of February 2018. Once completed, the restructured — and smaller — business will be able to focus on its growth initiatives.
Nyati, who was previously CEO of MTN South Africa, is completing a restructuring kick-started by his predecessor Robbie Venter, the son of group founder Bill Venter. Nyati joined Altron in April, succeeding Robbie Venter, and has moved quickly to shake up the 52-year-old group, whose assets include IT company Bytes and vehicle tracking and fleet management firm Altech Netstar.
On Nyati’s watch, the head office has been reduced in size, with about 40% of positions made redundant, giving Altron about R60m/year in savings.
“We took some key decisions to make sure we have a very lean head office… This exercise was really not about cost saving but asking if we have a structure that supports where we want to go. Do we have functions that talk to the divisions we have as a company? The answer was ‘no’, so we made those changes,” he said.
“We have a head office that is engaged, which is different to the way the company operated in the past. We used to have a hands-off approach. We are a leadership team that wants to be engaged and drive the business, that wants to create one Altron.”
Share price
The market has reacted well to Nyati’s plans, pushing the share price to a multi-year high of R13.94 on Tuesday morning, before retreating slightly. The share has appreciated by more than 20% since Nyati took the reins. It has climbed by 143% in the past 12 months. However, it is still a long way off the R40-plus levels it was trading at 10 years ago.
Nyati said building a cohesive Altron is crucial to ensuring the business can deliver profitable growth for shareholders.
“We built this company through acquisitions. Because of that, each of the 12 operating companies operated independently. That might have been good for that time, but today customers are looking for a one-stop shop.
“We are breaking down the silos,” he said. “We want to be one Altron in front of our customers. That’s a big cultural change — something the leaders of the business are not used to.”
A unified face to customers will allow the group to do more cross-selling, he said.
Geographic expansion will also be a key part of the strategy, with a focus on the rest of Africa and on “selected” European countries. “We already have a presence in the UK. That business is already doing quite well for us, and we’d like to double-down in that market.”
Australia is an important market, too, where the group is expanding its fleet management operations through Netstar. It recently acquired a company there called Fleet Logistics.
Microsoft
Partnerships with original equipment manufacturers is also important, Nyati said. The group will look to sign more OEM relationships. “We have built this company … through aligning ourselves with OEMs like Xerox and NCR. Who are the companies we need to work with? Are we aligned to those companies? If not, let’s have an action plan to form relationships with these companies.”
He hinted that Altron will seek a partnership with Microsoft in South Africa around cloud services. Nyati is a former MD of the software giant’s local subsidiary.
Reducing costs in a tough economic environment will also be a key focus area given the weak economy, though he recommitted Altron to spending on research and development, historically a strong point for the group. “It sets us apart and makes us relevant to South Africa.” — © 2017 NewsCentral Media