Reunert sees 9% increase in interim revenue

Reunert on Monday (27 May) reported a 9% increase in revenue for the six months ended March 2019, to R5.29 billion.

The Reunert group manages a portfolio of businesses in the fields of electrical engineering, information and communication technologies and applied electronics.

Earnings before interest, tax, depreciation and amortisation (EBITDA) rose 10% to R698 million, and operating profit climbed 8% to R615 million, however headline earnings per share declined 8% to 253 cents per share.

Reunert  declared a gross interim cash dividend of 130 cents per ordinary share, from 125 cents per share in 2018.

“The results from the national election and the anticipated improvements that are likely to ensue, should be positive for business confidence, foreign direct and local investment and improved management of state owned entities and municipalities. All of these factors are positive for the Reunert investment case and should result in improved economic activity as the changes are implemented, the group said.

The ICT segment increased revenue by 3% from R1.67 billion to R1.7 billion, and operating profit by 11% to R351 million.

“The Nashua Office Automation cluster continued to progress its strategy of evolving to a ‘total workspace provider’ with new services forming an increasingly important part of its revenue and profit mix. These revenues relieved some of the pressure on the lower sales of hardware units because of the prevailing economic conditions,” Reunert said.

Margins were maintained through a combination of increased service revenue and cost control resulting in a solid performance for this business. “Our voice over internet business, Electronic Communications Network, gained a record number of new customers, which largely offset the decline in usage per customer due to the economic environment and alternative technology offerings,” the listed holding group said.

“To improve the operating efficiency of the business, we are migrating to a best-in-class industry standard software platform to manage the network,” it said.

SkyWire’s integration into the ICT segment is complete, it said. “Connection rates are not yet at the required rate. However, the cash generation of the business remains in line with the investment case,” it added.

The ICT segment is expected to continue positively for the balance of the financial year with stronger business confidence, post national elections, hopefully creating an improved environment for asset investment by its customers, Reunert said, looking ahead.

The Applied Electronics segment commences the second half of the financial year with strong export orders and our solar energy business should continue its growth, which should result in a strong segment performance in the second half of the financial year.

“Despite the above, the group is unlikely to match the performance of the second half of the prior financial year. However with our strong balance sheet and operational focus, we remain well positioned to benefit from any improvement in local economic conditions,” it said.

Read: Reunert sees jump in earnings as it looks to SkyWire for growth