| Fri 24 Jul 2009, 9:07 | | ATN / ATNP - Allied Electronics Corporation Limited - Business update |
|
ATN ATNP
ATN
ATN / ATNP - Allied Electronics Corporation Limited - Business update
Allied Electronics Corporation Limited
(Registration number 1947/024583/06)
(Incorporated in the Republic of South Africa)
Share Code : ATN ISIN: ZAE000029658
Share Code : ATNP ISIN: ZAE000029666
("Altron" or "the company")
Business update
Trading overview
Shareholders are referred to Altron`s trading statement published on SENS on 5
February 2009, as well as to the outlook statement contained in Altron`s
abridged audited consolidated financial statements for the year ended 28
February 2009 when it was reported that inter alia:-
* the existing economic environment was expected to continue over the short
to medium term as market confidence remained weak and uncertainty
continued; and
* conditions for the first half of the current financial year would be
challenging, especially given the high base of the comparative period in
the prior year.
These concerns have been borne out in the first four months of this financial
year, with our main operations having been impacted as follows:
* Powertech has continued to experience extremely difficult trading
conditions as a result of the slowdown in the building and construction
sector arising from the recent high interest rate environment and the
global liquidity crisis. In addition, we have seen a slowdown in demand
from certain parastatal and mining clients as a result of funding issues.
It is evident from recent economic data released that these key industries
continue to face extremely challenging times, with conditions having
further deteriorated in the last quarter and few signs of recovery being
seen. This has had a negative impact on our power cables, distribution
transformers and industrial battery businesses. Further corrective action
has been required in order to align the cost base with the lower demand
levels. While the recent strength of the Rand has negatively impacted many
of the Altron group operations, the effect has been particularly pronounced
within Powertech. Our power cables business has also suffered from pricing
pressures in the market as a result of an excess of supply over demand,
which has depressed operating margins. As a result of the above factors,
Powertech is trading well below our expectations;
* Bytes continues to operate in challenging market conditions. Rigorous cost
control is being applied by most businesses in the current economic climate
which has resulted in the deferral and, in certain circumstances, the
cancellation of orders for IT equipment and related services. In addition,
increasing pricing pressures are being experienced for those projects that
are proceeding. Consequently, Bytes is also trading below our
expectations;
* Altech continues to deliver strong performance in what is a tough trading
environment, benefiting from its high proportion of annuity income.
Revenue and operating profits have increased as a result of continued good
performance from operations combined with the benefit of recent
acquisitions. Various opportunities for growth in East Africa are expected
to add to Altech`s solid performance going forward.
Prospects
The current economic environment continues to remain challenging and
unpredictable. Leading indicators show few signs of short term recovery in
local market conditions and while there is much talk of "green shoots" in
developed markets, it is unclear when these developments will be replicated in
South Africa. As a result the Altron group continues to focus on cost control,
working capital management and integrating our recent acquisitions.
Although the core infrastructural spend programme of the country should continue
to benefit the group in the medium to long term, the current slowdowns being
experienced in the mining and building and construction sectors, combined with
associated pricing pressures, will continue to exert short term challenges on
our operations serving these markets, particularly while liquidity remains
constrained.
This business update has not been reviewed or reported on by Altron`s external
auditors.
Johannesburg
24 July 2009
Sponsor
Investec Bank
Date: 24/07/2009 09:07:02 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
