Altron reports double-digit increase in financial year profit

JSE-listed Altron yesterday reported an 82.9% rise in normalised headline earnings per share (Heps) to 75 cents for the year ended 28 February 2022 – despite facing a tough year marked by the global shortage of electronic components and reduced capital expenditure by enterprise customers.

The software and computer services company said group revenue for the period rose 5.7% to R7.9 billion, while operating income grew 34.2% to R498 million.

Making his final comments on the group’s full-year performance before officially handing over the reins as group CEO at the end of June, Mteto Nyati commended the group for producing a solid set of results.

“This performance was driven by the resilience of our Own Platform segment that is characterised by high annuity revenue, the turnaround of Altron Karabina and Altron Managed Solutions (AMS), exceptional performance of Altron Arrow and a strong focus on cost reduction at the centre,” he said.

“Our net working capital slightly improved on the previous year, in an environment where we tactically increased inventory in Altron Arrow, Altron Fintech, AMS and Netstar to counter global component shortages.”

The group’s digital transformation division saw a 2.2% decline in revenue to R2.2 billion in the current period. This decline, it says, was driven by weak capital expenditure by its customers leading to the delay or cancellation of investment projects.

Altron Systems Integration (ASI) – a business falling under this division – saw its revenue slide by R254 million to R1.7 billion during the period.

This 13.3% slide it said is due to customers taking longer to decide [on purchases] and keeping their budgets tight, as well as the shortage of technological components which tech companies around the world have been battling with. “The global chip shortage has severely impacted lead times in getting hardware into the country and fulfilling customer orders,” says Altron.

“Hardware deals closed but on backlog due to lead times amount to R93 million. The operating income result of R13 million was R36 million lower compared to the prior year.”

However, the group’s Managed Services segment saw much better numbers, with the division reporting a 3.3% increase in revenue to R2.6 billion. The improved performance was driven mainly by its AMS business which recorded a 21% growth in revenue to R1.8 billion.

“After a challenging start to the year, management’s agility to course correct the business resulted in a R34 million operating income being achieved, representing a 30.8% improvement against the prior year.”

This segment’s performance was, however, hampered by that of the Altron Nexus business, which saw a R223 million revenue decline to R803 million, which was led by lower broadband revenues in the period.

The group’s Own Platform division showed resilience with revenue 6.2% higher at R2.9 billion and operating income 16.9% stronger at R546 million.