
Struggling business performances in East and West Africa have dragged down interim results for telecommunications, information technology and electronics group, Allied Electronics Corporation Limited (Altron).
South African-based Altron has released its interim results for the period ending 31 August 2012, showing an 11% increase in revenue compared to the same period last year. According to Altron officials the company’s three subsidiaries namely, Bytes, Powertech and Altech added to revenue growth with each contributing 19%, 11% and 7% respectively.
However, the company’s chief executive, Robert Venter, said in a statement that although the company was doing well in all three areas in terms of revenue, the rewards were not evident in the interim results.
Altron recorded a decline of 9% in earnings before interest, tax, depreciation and amortisation to R852 million, while headline earnings per share also shed value by 2% to 81 cents per share.
Pressures on Altron’s West and East African Altech businesses tamed the group’s interim results.
Last month, Altech officials announced that they planned to sell their majority 75% stake in their Nigerian business. This comes after the telecom and IT firm reported an 18% fall to R372 million as a result of the operational difficulties experienced in that business.
In June this year, Kenya Data Networks (KDN), which is 60% owned by Altech, announced more than 50 redundancies as a result of the loss of key clients and stiff competition.
“Six months ago, at the year-end, we identified three areas that required significant attention. These were Altech’s East and West African businesses and Powertech Cable business, specifically the Iberian operations,” said Venter.
Industry experts advise that South African companies looking to expand in Africa need to understand the business norms, choose markets carefully and invest for the medium to long term..
“Simply looking at the accounting costs of investment is not enough,” says Sadiq Malik, senior consultant MEA at Informa Telecoms & Media group.
He adds, “Altech’s decision to stop business operations in West Africa could be a mix of reasons, but sometimes it is wiser to cut your losses and run.”
Despite difficulties in its African business, Altron has plans to offer turnkey power solutions into Africa through its other subsidiary, Powertech.
“We believe there is much potential for Powertech to benefit from the projects underway for the electrification of Africa,” concluded Venter.
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