Altron says turnaround is ‘complete’ as earnings surge
The company’s conservative approach to managing its debt seems to be a sound strategy, analyst says
Altron’s turnaround is complete, CEO Mteto Nyati said on Thursday after the technology group said full-year earnings rose about a quarter.
Once a JSE top-40 stalwart, Altron lost favour with investors after a series of strategy blunders. Managerial missteps under founder Bill Venter’s heirs, Robbie and Craig, eventually drove Altron, and its one-time listed subsidiary Altech, from the JSE’s blue-chip index before its recent resurrection at the hands of CEO Mteto Nyati.
The company’s market value slipped from a high of R15bn in 2007 — at the time it was more valuable than Aspen Pharmacare — to just R1.7bn in less than a decade.
But its fortunes have changed since Value Capital Partners (VCP) invested R400m in December 2016 and Nyati took over as CEO in April 2017.
David Oberholzer, equity analyst at Nitrogen Fund Managers, said the market had reacted positively to the company’s results.
"Their balance sheet seems to be in good health," he said. "The company’s conservative approach to managing its debt seems to be a sound strategy."
Nyati has focused on growing earnings, offloading the group’s manufacturing assets and reducing debt.
"We have successfully completed the turnaround of Altron," he said .
Altron said normalised earnings before interest, tax, depreciation and amortisation (ebitda) from continuing operations rose 24% to R1.6bn in the year to end-February.
Gross revenue increased 30% to R19.2bn and headline earnings per share from continuing operations surged 50% to 179c.
Thanks to key contract wins in the private and public sectors, the SA business grew ebitda by 15% "despite the tough economic climate", Nyati said.
Ebitda rose 41% in the rest of Africa while the European business grew ebitda 80%, thanks to the Bytes UK business.
PODCAST | Consumers are fed up with Telcos
Vehicle-tracking operation Netstar grew earnings 19%.
Group net debt fell to R1.6bn from R1.9bn a year before.
"Overall, we want to continue to grow organically but will keep looking for bolt-on acquisitions in the areas of data analytics, cloud and the internet of things — these remain growth drivers for the company," Nyati said.
The "one Altron vision’" was also bearing fruit for Altron, said Oberholzer as the company had managed to effectively integrate its various business units and dispose noncore assets such as Altech and Powertech.
Looking ahead, Nyati said Altron was excited about the prospects of 5G technologies, particularly internet of things applications such as better vehicle tracking through subsidiary Netstar.
With government work making up 17% of their business, Nyati said they would like to see this getting to 20% to 25%.
The company has a presence in seven African countries.
The strategy for the next three years was to consolidate the Altron brand in the countries they already operated in, Nyati said. Beyond that, he said Altron was looking to establish a presence in Ghana and East Africa, particularly Tanzania.
Altron’s shares opened 0.2% higher at R20.50 on Thursday. The stock was below R5 in early 2016.