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Johannesburg - Technology group Allied Electronics Corporation (Altron) saw its interim profit slashed in half for the period to end-August, a figure that could have been worse if its high-flying subsidiary Altech had not delivered a strong performance.
Altron made a R405m profit during the six months, compared to R800m in the previous comparable period.
The group attributed the drop mainly to tough market conditions, especially at its subsidiary Powertech, which experienced low demand and pricing pressures at its cable operations. Its revenue went down 46%.
Another subsidiary, Bytes Technology, achieved 3% revenue growth, but margin pressures resulted in a 32% decline in operating profit.
Revenue at Altron's flagship subsidiary Altech increased by 4% to R4.7bn and raised its operating profit by 17%. This is due to the good performance by Altech Autopage Cellular, Altech Netstar and Altech East Africa.
Altech East Africa has become a key focus for the group after it increased its stake in Kenya Data Networks from 51% to 61%, and the acquisition of bandwidth capacity with Seacom.
Altech has also acquired an 8.5% stake in the East Africa Marine System (Teams) cable for $11m.
CEO Robert Venter said the next six months should produce better results. "During the second quarter, we started to see a gradual improvement in our businesses," he said. "This is consistent with recent economic data that indicate the bottom of the economic cycle may have been reached."
Venter said he expected demand levels to remain depressed, compared to those seen at the peak of the cycle, but Altron is prepared for a market recovery with a reduced cost base.
- Fin24.com
