South Africa: Rand, Foreign Competition Hinder IT sales
Allied Electronics Corporation (Altron), a family-owned business and one of South Africa's largest electronic and electrical equipment companies, said last week the strong rand affected its exports and created stiff competition in the local market.
Speaking yesterday at the company's half-year to August results presentation, CEO Robert Venter said Altron was competing with manufacturers from Brazil, India and China and that European companies had made inroads into SA because of the weak euro. "There are European companies, including a Spanish cable supplier, which have left a flat European market and come to SA."
Last year, Altron had to retrench 1000 workers in response to the decline in demand for its cabling. Analysts said Altron was one of many large manufacturing companies struggling to compete with the strong rand, but that the company would continue to maintain its market share in SA and the rest of Africa. Analysts also said Altron had successfully managed to cut costs and streamline its operations.
Venter said Altron's growth was in African markets, with the company's subsidiaries Allied Technologies (Altech) and Bytes having existing contracts in East Africa. Altech CEO Craig Venter said a major accomplishment for the company was brokering a deal with the Rwandan government to supply cable that would connect to the undersea cable known as Seacom. This would provide Rwanda with greater internet bandwidth and spur greater economic development.
Robert Venter was optimistic that Altron's subsidiaries, which also includes Powertech, would benefit from the growth in population and economic activity in Africa. "Bytes is already active in 26 countries and is planning to extend IT presence in Africa in collaboration with Altech," he said.
Altron's revenue for the half-year to August decreased by 3% from R12,1bn to R11.7bn while earnings before interest, tax, depreciation and amortisation increased 4% to R988m, with headline earnings per share having increased 6%, which Mr Venter said reflected the contrasting performances of the group's three operating entities - Bytes and Powertech offset a reduced performance from Altech.