Altron corporate news
ALTRON RESULTS REFLECT TOUGH ECONOMIC CONDITIONS
Tuesday, May 05, 2009
Altron’s financial results for the year ended 28 February 2009, released today, are in line with the trading statement issued in February this year. Revenue increased by 16% to R24.8 billion on the back of strong sales from all three of our subsidiary companies - Altech, Bytes and Powertech, despite challenging market conditions.
Robbie Venter, Chief Executive of Altron, commented that the downturn in the building and construction industry and the unprecedented and rapid decrease in the copper price during the latter part of the year had a negative impact on certain operations within Powertech, which resulted in Altron’s EBITDA increasing by only 1% from R2.21 billion in the prior year to R2.24 billion and adjusted diluted headline earnings per share declining by 18% for the year under review.
Commenting on the performances by its three subsidiaries, Venter said: “We had an excellent year from Altech which, due to its successful strategy in East Africa, good performances from its larger operations and its strong annuity base, resulted in adjusted headline earnings per share growth of 15%. Bytes’ results were roughly in line with the prior year reflecting a challenging economic environment. Powertech had a disappointing year, especially in the second half, as the building and construction industry contracted and commodity price declines required inventory write-offs within Aberdare Cables.”
According to Venter, the rest of the Powertech businesses performed above expectations, especially Powertech Transformers and Powertech Batteries. In referring to the recently acquired Powertech IST, he said that the operation continues to perform broadly in line with expectations with over performance in the Industrial, Data and Energy divisions being offset by a disappointing performance from the Telecoms division.
“Altron’s cash position improved strongly in the second half to R1.1 billion, although this is some R913 million down on last year as a result of the R1.9 billion invested into the future growth of our group through acquisitions and capital expenditure. Our strong balance sheet allowed us to maintain our dividend cover on adjusted headline earnings per share, declaring a dividend of 119 cents per share,” said Venter.
In terms of the business environment, Venter said that the fall in commodity prices has negatively affected mining companies spend, primarily through the deferral of projects while the global recession had led to tougher trading conditions in the Iberian and UK markets where the group operates. In addition, the high interest rate environment had impacted the building and construction market as predicted in our half year interim statement. Although it is expected that the recent interest rate will stimulate the sector it will only be in late 2009 or early 2010.
Powertech’s revenue grew strongly by 20% to R9.6 billion from R8 billion in the prior year, but EBITDA margins reduced to 7.7% from the 12.8% achieved last year partly as a result of once-off non-recurring charges relating to inventory write downs and retrenchment costs. This resulted in EBITDA declining 28% from R1 029 million to R738 million.
“Although Aberdare Cables experienced a strong first half of the year, the business was struck by a contraction in the building and construction industry, which comprises approximately 50% of Aberdare Cables’ revenue. The destocking of the electrical wholesaler distribution channel further restricted demand. Coupled with this, was the significant fall in the copper price from around $9,000 per ton to $3,000 per ton which led to inventory write downs on our stock holdings,” said Venter. He added that Aberdare Cables has been taking remedial steps in order to right size the business for the new demand environment which includes reducing production time, extending shut downs over holiday periods and rationalising certain of the operations.
“Our focus over the last six months has been on reducing working capital and controlling costs and we believe that we are now well positioned to take advantage of an upturn in demand and business opportunities as they arise”, said Venter.
“Although Bytes grew their revenue by 16% to R6 billion, EBITDA only increased by 3% to R427 million. Adjusted diluted headline earnings were in line with those reported last year and at a headline earnings and attributable profit level, the contribution from Bytes SA to Altron has reduced after Kagiso exercised its option to acquire a further 22% equity interest in that business with effect from 1 July 2008,” said Venter.
Altech delivered a strong set of results with adjusted headline earnings per share growing by 15% to 592 cents per share. Revenue increased by 11% to R9.2 billion from R8.2 billion in the prior year while operating profit improved by 32% to R874 million with a significantly improved operating margin of 9.5%.
Venter said that Altech significantly enhanced its EBITDA margins from 9.2% to 11.6% as a result of the high profitability in the newly acquired East African operations, as well as good performances from Altech Netstar and Altech Autopage Cellular.
“Altech increased its annuity revenue to 79% of total revenue in 2009 and its foreign and export revenue increased by 56% from R1 billion in 2008 to R1.6 billion, underpinning the sustainability of earnings in a tough environment. Notwithstanding the acquisitions and investments made by Altech during the year totalling more than R1 billion, the company ended with a strong balance sheet reflecting cash of R911 million. A dividend of 324 cents per share was declared, representing an increase of 12%.”
“We expect the challenging economic environment to continue over the medium term as market confidence remains weak and uncertainty continues. This outlook calls for our focus to remain on consolidation, cash flow generation, strict working capital management as well as internal cost efficiencies,” said Venter.
Venter cautioned that conditions for the first half of the new financial year will remain challenging, especially given the high base of the comparative period in the prior year. However, he remains confident that the Altron group is well positioned to take advantage of any improvement in the current economic environment given the remedial actions that have been put in place.
ends
Issued on behalf of:
Allied Electronics Corporation Limited (Altron)
For more information:
Robert Venter
Chief Executive
Telephone: 011 645 3663
Salomé Brown
Group Executive: Corporate Communications
Cell: 083 233 1333
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