Altron subsidiary Powertech trimmed 800 jobs last year, as it tried to contain costs as orders slowed.
The power technology unit trimmed its workforce to about 4 000 people as the recession resulted in delayed deals.
Powertech's retrenchments follow Altech subsidiary Autopage's news last month that it cut 217 jobs, in a bid to save R53 million a year. Altech is also an Altron subsidiary.
CEO Norbert Claussen says Powertech had a “tough year” and although the company has a solid foundation and the ability to manufacture good products, it cannot manufacture sales. He says it was “difficult to persuade people to buy”.
In the year to February, the company saw revenue decline 25%, to R7.2 billion, which had a knock-on effect on net profit, which was down 54%, to R123 million. Powertech makes up 32% of Altron's revenue, and 16% of its net profit.
Cost dilemma
Claussen says despite the “worst recession since 1933”, the company is still around and generating cash. He explains that most of the company's costs are fixed, and when orders fall, it still has those operating costs.
However, despite having “fought like hell” to keep material costs down, Powertech had to also remove some costs from other parts of the business, says Claussen.
Sales and administrative costs were trimmed by 7%, which will save R65 million a year, while manufacturing costs were trimmed by a percent, or R100 million a year.
However, says Claussen, a 10% to 15% improvement in revenue should filter down to the bottom line. The company will continue to focus on internal efficiencies and trimming costs. It also wants to develop new products to grow revenue.
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