Allied Electronics (Altron) is feeling the effects of the economic downturn and, while there are few prospects of an imminent upturn, will focus on controlling costs.
A statement on the Stock Exchange News Service (SENS) today reiterates that the group expects the existing economic environment to continue over the short- to medium-term, with market confidence remaining weak.
Having anticipated a challenging first half of 2009, the group says it has indeed been impacted by conditions in the first four months.
In particular, Powertech has continued to experience difficult trading conditions as a result of the slowdown in the building and construction sector. There has also been a slowdown in demand from some 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," the statement reads. "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."
The recent strength of the rand also affected the group, but Powertech in particular. As a result, this company is trading below expectations.
Bytes continues to operate in challenging market conditions, the group states. 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. There are also increased pricing pressures on projects which are proceeding.
Bytes is also, therefore, trading below expectations.
On a positive note, the group says Altech continues to deliver strong performance, 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," the statement reads. "Various opportunities for growth in East Africa are expected to add to Altech`s solid performance going forward."