Shares in Altron fell more than 7% on Thursday after the group said the operating environment for IT services had been “appreciably more challenging” both globally and in SA, characterised by constrained IT budgets and restricted consumer spending.
Against this backdrop, the group said in a voluntary operational update that its first-half revenue was expected to be marginally softer, with continuing operations flat for the period.
Group earnings before interest, taxes, depreciation and amortisation (ebitda) were expected to be at a similar level to the first half of the 2025 financial year, with operating profit reflecting single-digit growth for the period, it said.
However, the group benefited from its diversified portfolio, which has mitigated the effect of difficult market conditions in IT services.
Altron is boosting its annuity revenue streams as it sees these as more profitable and a good way to predict future finances.
Annuity revenue refers to a regular stream of income generated from a contractual agreement in which an individual or entity receives a series of payments over a specified period.
At the release of the group’s annual results in May, CEO Werner Kapp and CFO Carel Snyman highlighted efforts to grow this type of turnover in each operating unit, underscoring its strategic importance to the group.
Altron reported at that time that R6.068bn out of R9.588bn (63%) of its revenue was annuity based in the period, 7% higher than the previous year.
The group said on Thursday that the Platforms segment had maintained its momentum into the first half, with double-digit revenue growth expected for the period, underpinned by robust annuity revenue streams.
“This is anticipated to translate into strong growth in ebitda and operating profit. Altron Fintech was a key contributor to this performance, delivering strong double-digit growth across revenue, ebitda and operating profit,” it said.
Its Collections and Payments platform continues to drive this growth, benefiting from increased SME customer acquisition and rising transaction volumes.
The IT Services segment continued to face headwinds as a result of reduced client spending and a challenging operating environment, resulting in pressure on both revenue and gross margins.
“Altron Digital Business has been significantly affected by these challenges and is projected to report an operating loss for the interim period, with a profit improvement strategy being implemented to address these persistent industry challenges,” Altron said.
Altron Security and Altron Document Solutions benefited from the corrective action and profit improvement strategy implemented in the previous years, with both businesses delivering healthy growth during the period.
As previously guided, the Distribution segment continues to navigate the cyclical global slowdown in electrical component distribution, resulting in lower revenue and operating profit for the period.
The sale of Altron Nexus became effective in August, and this delivered on the group’s commitment to exit its discontinued operations, bringing clarity to its structure and enabling greater focus on our core businesses.
Altron will release its interim results on November 3.
Correction: August 29 2025
This article has been amended to clarify that the company released a voluntary operational update and not a profit warning.
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