DURBAN - JSE-listed technology company Allied Electronics Corporation (Altron) cut its dividend payment by 24 percent in the year to end February in response to the Covid-19 outbreak in its business operations.
The group declared a dividend of 55cents a share, down from last year’s 72c.
Chief executive Mteto Nyati said yesterday that the group had to take into consideration the impact of the pandemic in deciding the dividend for the current year.
“The board remains committed to maintaining Altron’s dividend cover of 2.5 times. However, in light of the economic upheaval from the Covid-19 pandemic and uncertainty thereof going forward, the board has decided that it would be prudent to preserve cash at this time and declare a dividend that is 40percent less than would otherwise have been declared,” Nyati said.
In its results, Altron reported a 14percent increase in earnings before interest, tax, depreciation amortisation (Ebitda) to R1.8 billion, benefiting from its One Altron strategy implemented three years ago.
The group set itself a target of doubling its Ebitda growth in five years, and Nyati said the group was on track to achieve that goal.
“We have achieved 90percent of that target in these three years and we still have two years to go. However, we are aware of the Covid-19 outbreak that will provide a challenge in achieving our goal, but we are confident that we are still within reach,” Nyati said.
The group grew its revenue by 6percent to R1.6bn while headline earnings per share from continuing operations increased by 2 percent to 182cents a share.
The five-year roadmap under One Altron strategy aims to prioritise revenue growth, improve profitability, transform the customer experience and employee excellence.
“We have made good progress on One Altron’s goals. We have strengthened the group through the disposal of non-core assets, rationalisation of operations and the execution of targeted acquisitions in high-growth areas,” Nyati said.
Looking ahead, Nyati said Altron would focus on converting the cloud computing pipeline projects of Altron Karabina into revenue in South Africa, improving the profitability of Altron Nexus, integrating Ubusha into the group, and capitalising on the digital transformation agenda to meet customer needs through offering a One Altron solution.
Peter Takaendesa, the head of equities at Mergence Investment Managers, said Altron reported strong results with normalised operating profit growing slightly ahead of market expectations and the company’s own guidance of high single-digit growth provided last year.
“However, the dividend reduction and weaker guidance for the financial year to February 2021 due to the Covid-19 impact, as well as a share price that has been relatively resilient, have resulted in a very muted share price reaction today,” Takaendesa said.
He said the expected revenue decline looked less severe compared to guidance from other global ICT companies, but Altron had a higher exposure to annuity revenue and therefore may be less affected during this difficult time.
Altron’s shares closed 0.10percent higher at R19.77 on the JSE yesterday.