Despite JSE-listed Allied Electronics (Altron) having failed in the first half of the year to recover from its disappointing 2015 financial year losses, CEO Robert Venter assured that the worst was behind the company as corrective action taken should see the challenged units removed from the bottom line.

The faltering performance of several units in the financial year to February 2015 had sent headline earnings per share (HEPS) plunging 50% to 94c, with the company swinging to a loss of R60-million for the year, from a profit of R775-million in the prior financial year.

During the first half of the new financial year, Altron remained in the red, as “adverse” challenges weighed on its Powertech Transformers, Altech Multimedia, Altech Autopage and Altech Node business units.

However, the group maintained that focus on its stronger performing information technology (IT) and radio holdings businesses would work to its advantage as it moved to recover its losses.

“We have commenced with detailed actions to execute on our new strategy. The plan will focus the group, leverage the competitive advantage that we have in the IT and telecommunications space and limit our exposure to the manufacturing sector,” Venter said, noting that, going forward, it was crucial that Altron reposition itself.

The group posted a basic loss a share of 151c for the first half of the financial year – a significant contraction on the basic earnings a share of 58c recorded in the prior corresponding period – and a headline loss a share of 64c, plunging from the HEPS of 72c achieved in the six months to August 2014.

The net loss equated to R618-million, compared with profit of R190-million in the first half of last year.

Altron's revenue for the period decreased 7% to R13.3-billion and earnings before interest, taxes, depreciation and amortisation (Ebitda) by 69% to R241-million.

Speaking at the group’s half-year financial results presentation at Altech’s headquarters, in Woodmead, he explained that, excluding the “four problem areas”, namely Powertech Transformers, Altech Multimedia, Altech Autopage and Altech Node, the company would have posted a healthier 2% decline in revenue to R9.5-billion, an Ebitda contraction of 21% to R487-million and HEPS of 69c.

Instead, Altech Autopage, Altech Node and Powertech Transformers, which were now considered discontinued operations, contributed widened losses of R378-million, compared with a loss of R34-million in the previous corresponding period.

Powertech Transformers saw a decline in orders from State-owned power utility Eskom, while Altech Node experienced operating losses.

Altron would now dispose of Powertech Transformers, with the company’s Pretoria West factory currently downscaling and, a year after its much anticipated launch, would abandon its Altech Node in October, with all closure costs taken at the half-year under review.

Altech Autopage continued to operate in a difficult and challenging market, while the sale of its GSM subscriber bases to three mobile network operators for R1.5-billion was being finalised, which should occur by February 2016.

Altech Multimedia was negatively affected by the delay in Africa’s digital terrestrial television migration; however, action had been taken to “rightsize” the business with headcount reductions and the consolidation of all the international operations.

“Equity partners were being sought in the noncore businesses, which will help us access new markets, technologies and capital. In some cases, an asset identified as noncore may result in an outright sale,” Venter added.

Altron would continue to implement various initiatives to reduce costs, including the consolidation of its three head offices into one and the expansion of its shared services.

“Altron’s future state will be a smaller, more agile group that is focused on its core IT assets. This will be a stable base from which to grow,” Venter concluded.