Altron weathers the chip shortage crunch, sets sights on becoming 'capital light'

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  • The global chip shortage impacted lead times in getting hardware into the country.
  • Lead times due to chip shortages have in some instances extended 300 days.
  • Altron aims to become a "capital-light" company and has been disposing of loss-making businesses.

Altron's business units saw revenue growth over the past financial year despite persistent shortages of chip conductors that impacted technology companies worldwide.

Altron - whose operations include the distribution of electronic components, digital transformation and security - saw its operating income increase 34.2% to R498 million, as revenue reached R9.5 billion, up 5%.

Outgoing CEO Mteto Nyati - who is stepping down at the end of the month after five years with the company - said the turnaround of Altron Karabina and Altron Managed Solutions were instrumental in driving growth. 

"Our company is making good progress in setting up Altron 2.0 by disposing capital-heavy and loss-making businesses and acquiring assets in high-growth segments of the market," said Nyati.

Altron 2.0 aims to make the company "capital light", owning its intellectual property and providing differentiated offerings in cloud, security, data, and software application development.

Altron Kariba, which is a Microsoft Licensing Partner and offers cloud migration services, grew its operating income by 47.4% to R317 million. The division had posted a loss in 2020.

Another subsidiary of the company that felt the impact of microchip shortages was Netstar, the provider of vehicle tracking systems. Although Netstar had seen subscriber growth since June 2021, the ability to source components put  pressure on the production of units. However, the company managed to lift revenue by 7.8% to R1.7 billion.

The company stated that a "strong focus" will be placed on the turnaround of Altron Systems Integration (ASI) whose revenue was down by R254 million compared to the previous financial year. As part of streamlined its business, Altron finalised the selling Altron Document Solutions to BiAfrica and sold the Altron People Solutions business process outsourcing unit to ISON.

"ASI's infrastructure business performed weakly during the financial year mainly due to customer budget constraints and the global component shortages, with certain lead times extending over 300 days.

"Customer decision times are taking longer, and budgets are being kept tight. We foresee continued pressure on supply chain and pricing due to the global component shortage," the company said.

Altron's headline earnings per share increased from 37 cents in the 2021 previous year to 51 cents, with a final dividend of 15 cents per share declared and an interim dividend of 33 cents per share.

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