Altech is starting to change its strategic direction
ALLIED Electronics Corporation (Altron) has begun implementing changes to its strategic direction following a disappointing financial performance last year, which saw earnings taking a nose dive.
Altron, which has investments ranging from information technology to power electronics industries through its subsidiaries including Allied Technologies and Bytes Technology, is streamlining its business after reviewing its operations.
In the annual report released yesterday, Robert Venter, the Altron chief executive, said the board had decided to transform from a family-managed business to an independent management structure.
Altron shares on the JSE both rose yesterday with Altron A shares rising 0.92 percent to R13.18 while Altron N shares climbed 1.06 percent to R13.39.
Over the past year Altron shares have fallen by 50 percent compared with a 2.4 percent gain in the JSE all share index.
In addition, a plan to focus the group in certain areas where its board believed it had the resources and the skills to leverage a competitive advantage was underway. In addition, non-core assets have been identified for disposal.
“Certain material non-core assets have been identified for disposal and the group is exploring strategic equity and technology partnerships with global industry players in other areas of the business,” said Venter. “Furthermore, particular emphasis is being placed on the need to significantly reduce central costs by creating a leaner management structure and continuing to implement shared services,” added Venter.
Bytes Document Solutions UK, LaserCom and the Retail ATM business were spun off. Altech Autopage is also going on sale, which is expected to be completed during the year ended February 29.
Last year proved to be one of the toughest in the company’s history.
The four-week strike led by the National Union of Metalworkers of SA (Numsa) in July severely impacted the business, particularly the cables and transformers operations.
The impact of the Numsa strike was exacerbated by the preceding strike in the platinum belt. About R67 million was lost as a result of the strike at an operating profit level and R41m at a headline earnings level, the company had previously announced. The group was also impacted by a significant decline in demand from a major customer in the public sector.
Altron Power experienced a marked decline in orders from Eskom and the Global System Mobile portion of the telecoms sector was impacted by deflationary pressures, the reduction in mobile termination rates and tough economic times.
The main causes of the decline in the group’s profitability were the significant drop in operating performance at Powertech Transformers, declines at Altech Multimedia and Altech Autopage, and the start-up costs and the slow uptake of the Altech Node.
THE TRIPARTITE initiative between the Common Market for Eastern and Southern Africa (Comesa), the East African Community (EAC) and SADC is rooted in the AU’s Lagos Plan of Action and the Abuja Treaty, which aim to establish an African Economic Community. The three Tripartite communities have reached an important milestone in integrating their markets and economies by agreeing on the legal text to underpin the Tripartite Free Trade Area (TFTA).
The underlying rationale for African economic integration is that domestic markets are small by global standards, certainly too small to support economic diversification and industrialisation. The establishment of the TFTA is not only a political vision but makes business sense.
By establishing a larger free trade area, regional trade will be enhanced. Creating larger markets with greater critical mass will enhance the African investment proposition; it is also the only way Africa will be able to decisively move-up the value-chain and become a more effective player in the global economy. Regional integration is therefore critical to accelerated, inclusive and sustainable growth in Africa.
In the context of increased competition for access to the African market, it is not surprising that African countries are striving for greater regional integration. Despite geographic proximity and cultural affinity, African countries’ trade is still low by global standards and accounts for only 16 percent of Africa’s total trade. The TFTA therefore represents an important effort to enhance regional co-operation.
Agreements
$1.6 trillion (R19.9 trillion).
This is sending a powerful message that Africa is committed to its economic integration agenda and in creating a conducive environment for trade and investment.
The TFTA will therefore increase Africa’s prospects of stimulating industrialisation, employment, income generation and poverty reduction.
Importantly, by providing a larger market, it offers the opportunity to improve economies of scale and efficiency, thereby improving Africa’s competitiveness both in its own markets and globally.
The TFTA if properly utilised, can be a springboard that catalyses a wave of growth in the manufacturing sector.
The challenge for the member states is to ensure that they take advantage of the opportunities and proximity to fast growing African markets.
For South Africa, the Tripartite area already absorbs a significant share of South Africa’s exports.
Over the past three years, South Africa has exported on average, annually, goods to the value of $16.8 billion to this region. This constitutes 18.3 percent of the country’s global exports. Hence, the importance of this initiative to South Africa’s industrial and employment objectives.