Just a week after its subsidiary, listed telecommunications group Altech, posted a strong set of results, electronics and IT group Altron has turned in dreadful numbers, with headline EPS down by more than half.
The group’s revenue fell 8% to R12,1bn in the six months to August 2009 and operating margins fell sharply, leading to a 28% decline in earnings before interest, tax, depreciation and amortisation.
Altron CEO Robbie Venter, pictured, says subsidiary Powertech has come under considerable pressure because of the recession. “Our interim results came under pressure mainly due to Powertech being impacted by lower demand levels and strong pricing pressures compared to the peak levels they experienced during the first half of last year,” he says.
The reduction in the copper price also hurt Powertech, which operates a large cabling business. Powertech’s operating profit declined by 75% on the back of a 26% slump in revenue. Operating margin fell from 10,1% last year to 3,4%.
Altron’s IT arm, Bytes Technology Group, has also felt the impact of the slowdown. Operating margins in the IT business have come under pressure, Venter says, falling from 5,4% to 3,5%. This resulted in a 32% decline in operating profit.
Venter says there are indications that the worst of the recession is over. “In the second quarter we started to see a gradual improvement in our businesses [in line] with recent economic data that indicates that the bottom of the economic cycle may have been reached,” he says.
“Compared to the first half, I therefore expect an improved performance in the second half, though I believe that demand will remain depressed compared to those see at the peak of the cycle.”
Frost & Sullivan analyst Mpho Moyo says the results aren’t all bad news. Altech’s strong performance has helped offset the poor results from Bytes and Powertech, she says.
Altron’s share price was trading down 1,3%% on Tuesday morning. — Staff reporter, TechCentral