Higher earnings and record revenue over the past 12 months emerged after JSE-listed Allied Electronics (Altron) ended a “significant year of transformation”, with extensive restructuring and rebranding initiatives amid far-reaching cost-saving projects starting to bear fruit.

The group reported a 42% rise in headline earnings per share (HEPS) to 188c during the year to February, while normalised HEPS increased 49% to 206c.

Basic earnings per share from Altron’s total operations recorded a 294% jump to 192c apiece in the year under review, compared with the basic loss per share of 99c recorded last year.

Altron achieved a 20% rise in normalised earnings before interest, taxes, depreciation and amortisation (Ebitda) to R1.9-billion during the year under review, while profit for the year, including discontinued operations, improved from a loss of R942-million in 2013 to a profit of R775-million during the 12 months to February.

Revenue for the year to February rose to a record high of R27.8-billion – a 12% increase on the restated R24.5-billion in 2013.

Altron, which has now settled “a little bit” after a busy year of restructuring, rebranding, integration, cost cutting and accelerating efficiencies, declared a gross ordinary dividend of 80c, a hike from the 60c apiece distributed in 2013.

“It has been a time of change for the Altron group. Significant projects were initiated during the year and we are very pleased with how they are unfolding and the benefits seen so far,” Altron CEO Robert Venter says.

Altron, which continues to shift its businesses from productcentric to customercentric, has reorganised into two simplified operational units, namely Altron Telecommunications, Multimedia & Technology (TMT), which was formed in August after the Altech and Bytes businesses merged, and Altron Power, under which all the Powertech businesses fell.

The initiatives, particularly the integration of Altech and Bytes into Altron TMT, are expected to result in “significant cost savings” and many new “revenue-generating opportunities”, Venter explains.

He expects TMT to start realising sustainable yearly cost-saving benefits of about R87-million from the next financial year after reorganisational costs of about R23-million were injected into the unit in the 2014 financial year.

“Significant successes have already been achieved with new customers coming on board, large tenders being won, such as the R1.2-billion Gauteng Broadband Network [project], and good cost savings coming through,” Venter says, adding that the formation of TMT played a significant role in securing the contract.

Altron TMT group executive and Altech CEO Craig Venter says he is pleased with the solid performance of both Altech and Bytes under the Altron TMT banner.

“We are certainly beginning to reap the benefits of the collective power of these two organisations and have produced a set of results that is significantly better than what we had originally anticipated,” he says.

Altron TMT revenue increased 12% from R17.5-billion in 2013 to R19.5-billion by February 2014, while the unit’s normalised Ebitda rose 16% from R1.3-billion to R1.5-billion.

The normalised Ebitda margin improved from 7.4% to 7.7% and normalised headline earnings improved 26% to R646-million, Craig Venter points out.

Altech, which was weighed down last year by its now-disposed-of lossmaking East and West African operations, showed good recovery during the financial year under review, with most of its operations, including Altech Autopage, Altech Netstar and Altech UEC South Africa, performing well.

Altech’s revenue rose 2% to R10.7-billion during the 12 months to February and profitability recovered strongly, with normalised Ebitda increasing 16% to R890-million.

Altech achieved group operating profit of R647-million – an 18% increase on the prior year.

Bytes reported a 25% increase in revenue to R8.8-billion and a 12% increase in Ebitda to R595-million during the year to February; however, the unit’s Ebidta margin fell from 7.6% to 6.8% on the back of continued gross margin pressure.

Meanwhile, Altron Power, which had a “tough year” in the prior financial year, is showing “encouraging signs” of recovery and, despite impending industrial action in the steel and engineering sector challenging performance, the company believes Altron Power could “contribute meaningfully” to the group in the future.

“Powertech made a pleasing recovery, particularly in its electric cables business, albeit off a low base. Revenue increased 14% to R8.4-billion, while Ebitda increased by a pleasing 45% to R386-million. Headline earnings for Altron Power increased from last year’s breakeven to R77-million,” Robert Venter notes.

The Powertech Cables group experienced a 14% rise in revenue and a substantial 623% increase in Ebidta to R131-million during the period under review, with the growth emerging from the South African operations.

“Pricing pressures continue in the market but higher volumes in the trade sector have improved the recovery of fixed manufacturing costs,” he adds.

The Powertech Transformers group increased revenue by 10% and Ebitda by 16%, while the Powertech System Integrators unit delivered a “disappointing” performance, with revenue increasing 12%, but Ebitda falling 38%.

“Altron Power’s prospects are encouraging, considering the emphasis on the electrification of Africa and promised infrastructure spend in South Africa. Continued focus will be placed on improving manufacturing efficiencies, as well as exploiting opportunities in the renewable-energy sector and rail projects and increased supply into Africa,” Venter comments.