Altron takes a beating as orders slow

ALTRON continued to see adverse conditions in four areas of the business in the six months ended August, the company said on Wednesday.

This came amid losses in its Altech Node business and Altech Autopage as the sale of its subscriber base to MTN, Vodacom and Cell C was being finalised.

The diversified electronics, telecoms and multimedia group said it would dispose of Powertech Transformers and close Altech Node. Both businesses, as well as the Altech Autopage cellular subscriber bases, were classified as discontinued operations.

The transformer business had experienced a further fall in orders from Eskom, while Altech Node suffered from SA’s delayed migration to digital terrestrial television.

“It is a highly disappointing set of results,” Ron Klipin, a portfolio manager at Cratos Capital, said on Wednesday.

Interim earnings before interest, tax, depreciation and amortisation (Ebitda) dived by 69% to R241m from the same period previously as revenue fell 7% to R13.3bn.

Headline earnings per share fell to a loss of 64c from a profit of 72c.

Revenue from continuing operations fell 8% to R10.5bn, and Ebitda plunged 53% to R340m, with the Ebitda margin halving to 3.2% from 6.4% a year earlier.

“(Group) debt is still too high at R3.8bn, with pressure on cash via high investing activities and working capital,” Mr Klipin said.

He also said the information technology division housing the Bytes operations had reported flat earnings, but that proactive cost cutting and further closure of operations should help stabilise the business in due course.

Altron said capital items at continuing operations had risen “significantly” from the previous year, mainly due to R152m of goodwill impairments and R50m in impairments of intangible assets.

“This resulted in a loss of R67m from operating activities, significantly lower than last year’s profit of R471m,” the company said.

“The effective tax rate is very high in this period due to tax charges incurred in the profit-making business units, while we are unable to recognise deferred tax assets in a number of loss-making operations due to the uncertainty around recoverability given the current outlook.

“Furthermore, several deferred tax assets had to be reversed during the current reporting period,” it said.

This led to a loss from continuing operations for the period of R240m compared with a profit of R235m in the same period previously.

Results from discontinued operations showed a big decline from the same period previously, with Ebitda dropping from a profit of R54m to a loss of R99m.

Altron said substantial capital items were related to the closure of Altech Node and the impairment of goodwill, as well as property, plant and equipment, at Powertech Transformers. Net finance costs for discontinued items had increased significantly, mainly due to a substantial increase in the factoring costs associated with the Altech Autopage handset receivables, Altron said.

These factors resulted in a loss from discontinued operations of R378m, compared with a loss of R34m in the period last year. Meanwhile, in terms of overall operations, cash generated in the period of R528m was 47% down on the same period last year.