Etion targets world markets

• Technology group is testing some products in Mexico and Indonesia

Technology group Etion will focus more on its international business as the company looks to offset the effect of a weaker rand, while anticipating a faster economic recovery from markets outside SA driven by increased demand for its cybersecurity products.

Technology group Etion will focus more on its international business as the company looks to offset the effect of a weaker rand, while anticipating a faster economic recovery from markets outside SA driven by increased demand for its cybersecurity products.

Group CEO Teddy Daka said in an interview that the company was in the process of testing some of its products in Mexico and Indonesia. He said SubSaharan Africa was also showing promise before Covid-19 took hold.

Daka said demand for Etion’s products has been driven by the increased need for digitalisation and cybersecurity after the emergence of the pandemic.

The company, which traditionally manufactured defence technology and equipment for locomotives at Transnet, has shifted its strategy over the past year to focus on cybersecurity and cloud-computing products and services.

Daka said a focus on their international business did not mean they had forgotten about

SA. Rather, a lot of their local business activity — such as that connected to rail or telecoms — was directly affected by economic growth prospects. With SA’s economy set to contract by more than 7%, this did not bode well for Etion locally, said Daka.

Etion reported an after-tax loss of R36.1m for the year to March, from a loss of R2.7m previously. Revenue was down 4% to R572.9m.

The company recorded a 20% drop in revenue for its design and manufacturing unit, Create, while the Digitise business, hampered by lower rail spending by the government, saw a 69% fall in revenue. Revenue for the Connect unit fell 34% due to the slowdown in fibre installations as network operators continued to reduce capital expenditure in response to lower demand for fibre services in a weak economic environment, the company said.

The bright spot, said Daka, was Etion Secure, whose LAWTrust unit “focused on building solutions online and supporting its customers remotely”. This, combined with the effective implementation of its international expansion strategy, enabled the business unit to more than double revenue and profits, he said.

Revenue for Secure grew to R225m from R107m during the period, while profit went from R5.4m to R35.1m.

Etion, previously known as Ansys, bought information technology developer LAWTrust for R109m in June 2018, which is now known as Etion Secure.

Daka said the company was banking on digital services provided by Secure, which offers cloud-computing products, meaning the technology can easily be made available to foreign customers. Businesses such as Digitise and Connect have limited “export potential”, he said, since they are hinged on rail and telecommunications infrastructure in SA.

Etion reported R64m in oneoff costs in the period, which exceeds its market capitalisation, as it wrote down inventory and retrenched staff amid a reorganisation of its businesses.

Etion’s share price closed 20% weaker, its lowest close since late July, at 8c, giving it a market capitalisation of R45.15m.