By Admire Moyo for IT Web
JSE-listed technology services firm Altron is selling its building that housed subsidiary Altron Document Solutions in Isando, Johannesburg, and is retrenching employees from the business unit.
The company says the printing unit was negatively impacted by the COVID-19 pandemic, which resulted in a massive drop in the printing business.
Altron Document Solutions describes itself as “the world’s largest Xerox distributor and Africa’s leading technology and services company”.
It markets and services the complete range of Xerox document equipment, software solutions and services to 26 Sub-Saharan Africa countries.
However, the business was hit by the COVID-19 pandemic, leading the Altron Group to sell the Altron Document Solutions building.
“The demand for printing services has declined by about 45% due to COVID-19, and this, unfortunately, led us to retrench 73 people in Altron Document Solutions,” Zipporah Maubane, Altron spokesperson tells ITWeb.
“With fewer people in the Altron Document Solutions team, we now don’t require as much space, so we are selling the building and are looking for an appropriate space elsewhere for our colleagues in that business. We have owned the building for over 40 years,” she adds.
Since Mteto Nyati took over as CEO of Altron in 2017, it has been selling off some non-core businesses.
Nyati announced the company disposed of its last non-core asset Altech UEC, a set-top manufacturing business, to Skyblu Technologies, in January last year.
In its financial results for the year ended 21 February, Altron posted an increase in earnings before interest, taxes, depreciation and amortisation of 14% to R1.8 billion, while revenue increased 6% to R16.7 billion during the same period.
However, at the time, Nyati told ITWeb in an interview that COVID-19 was expected to have a negative impact on its business in the year ahead.
The company went on to introduce a raft of measures to save R500 million in costs in anticipation of a dip in revenue as a result of the coronavirus. Some of the measures included salary freezes and bonus cuts.
Altron’s move to sell its Isando building comes as it in May said it had set aside R300 million to complete its new Woodmead office campus announced last year.
Last year, Altron signed a rental contract with Growthpoint Properties for a 29 000-square metre head office in Woodmead.
Commenting on the Altron building sale, Derrick Chikanga, an analyst at Africa Analysis, says like other devices businesses, the printing business was negatively affected by the COVID-19 pandemic and the subsequent lockdown that was enforced by most countries.
He points out that most South African printers originate from European markets, while printer components are mostly manufactured in Asian markets.
“As such, the COVID-19 pandemic had an adverse impact on the entire global supply chain, thereby negatively impacting the local printing industry,” says Chikanga.
He points out that the work-from-home policy that was adopted by most companies since the onset of the pandemic has also hugely impacted demand for printers by large corporates.
“Most local distributors focus little attention on small office or home office devices, with their primary focus being on enterprise-grade printers. Hence, since most businesses are still enforcing remote work policies, demand for large format printers has been hugely affected.”
Nonetheless, Chikanga believes the industry will recover as businesses resume operations and some employees return to their offices.
“While the work-from-home policy might continue into the future, not all companies and employees are able work efficiently from home.
“Working from home also incurs additional costs to companies, such as Internet connectivity costs. Hence, while the industry might not recover to its original level, some restoration to production in the printing industry should be expected,” he concludes.