Allied Electronics | Delivering the turnaround
Altron is delivering on its strategy of establishing an ICT focused business, while exiting it's capital-intensive manufacturing operations. The strategy has reduced net working capital c.67% since FY'15 and improved the quality of earnings with more annuity-like revenue. We believe the group is well positioned for sustainable growth over the medium-term as it continues to reduce its cost base and grow its geographic footprint. In our view, the restructuring is a direct result of Altron's problematic previous acquisition strategy. Decreasing profitability and group wide inefficiencies drove debt to unsustainable levels, exposing the poor execution of its acquisitions. The recovery of EBITDA margins from 3.3% in FY'16 to 6.8% is firm evidence of the turn in the business's fortunes.
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