Reunert cocks a snook at weak economy - TechCentral

Reunert cocks a snook at weak economy

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Reunert has delivered a robust earnings performance for the year ended 30 September 2015, despite a weak macroeconomic environment. Headline earnings per share (EPS) climbed by 16%, well ahead of revenue growth of 7%, it said on Monday.

Headline EPS from continuing operations raced ahead by 47%, though basic EPS took a 50% knock as a consequence of the disposal of Nashua Mobile and the non-recurring nature of the 2014 profit on the sale of its subscriber bases.

On the back of the strong earnings performance, Reunert has hiked its dividend by 9,8% to R3,02/share. The share price has also enjoyed a lift on the back of the results. Shortly after midday on Monday, it was trading 2,2% higher at R70,51. Earlier in the session, it reached an intraday high of R71,31.

The group’s information and communications technology businesses, which are grouped under the Nashua brand, fared well, with “some significant improvements, primarily in the voice businesses”.

“Although revenue was flat, operating profit net of the discontinued operation increased by 17%, from R453m to R533m,” Reunert said. “This was achieved through a careful evaluation of the whole supply chain and realising savings in our distribution and general overhead costs.”

The group said subsidiary ECN had a “successful year” and exceeded the milestone of delivering a billion voice minutes in a single year. It “entrenched its position as the largest independent voice-over-Internet protocol solution provider in the country”, it said.

Nashua Communications, which now falls under the Reutech business, enjoyed strong service revenues, Reunert said.

The group’s CBI-electric business improved revenue by 14% to R4,1bn and operating profit by 21% from R428m to R520m, driven primarily by the energy and telecommunications cables business units. The circuit-breaker business unit had a challenging year.

At Reutech, revenue climbed by 8% to R1,1bn and operating profit by 6% to R181m. This was despite a slowdown in the communications and radar business units, Reunert said.

The group warned that the poor state of the South African economy was likely to constrain future growth prospects.

“The business drivers of the group’s performance continue to be challenged by Reunert’s strong concentration in the South African market. Accordingly, the future growth prospects of the group are likely to be constrained by the domestic macroeconomic environment,” it said.

“The group’s future prospects are augmented by recently secured long-term contracts specifically in applied electronics. These revenues, with a strong, hard currency exposure, are expected to bolster operational performance.”

Reunert was established in 1888 by Theodore Reunert and Otto Lenz. It was listed on the JSE in 1948.  — © 2015 NewsCentral Media

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