Reunert has increased its interim dividend by 7% to 75c/share, despite tough trading conditions that saw it eke out a 1% year-on-year improvement in headline earnings per share.
The technology, electrical and electronics group, which owns a range of businesses in the ICT space, said revenue for the six months to end-March 2022 rose by 11% to R5.1-billion. Profit after tax rose by 7% to R331-million.
There was a continued underspending by government and state-owned enterprises on electrical infrastructure in the period. This, coupled with increased logistics costs, extended supply chains, global electronic component shortages and high commodity prices exacerbated by the Russia-Ukraine war, all adversely impacted input costs, Reunert said. A strike in Reunert’s Electrical Engineering segment also served to crimp output – by about 14%.
The Applied Electronics segment performed better, thanks to export contracts, with operating profit up by 77% to R55-million.
“Due to the timing of these sales, there was insufficient time for the receivables resulting from the sales to be converted into cash, which together with an increased investment into inventory relating to future sales, were key factors in the group’s reduced cash conversion to 53% of profit after tax from 87% of profit after tax for the first half of 2021. This will be remedied in the second half of the 2022 financial year.”
Reunert’s ICT segment, meanwhile, delivered results in line with expectations. Segment operating profit rose by 4% to R305-million.
The Total Workspace Provider business successfully onboarded a range of new brands to overcome a product portfolio gap resulting from a fire in the previous year at the sole supplier of electronics chips to the group’s supplier of entry level multi-function printers.
Reunert’s new IT systems integration business, +OneX, contributed positively to the growth in the segment’s operating profit following several acquisitions.
Communications businesses ECN and SkyWire maintained their profitability at the same level as a year ago despite pressures caused by the economic environment and load shedding.
Reunert said its recent acquisition of Etion Create from JSE-listed Etion Limited for R168-million (or up to R210-million “subject to certain agreed adjustments) will see the business integrated into its Applied Electronic segment and provide “original design capability for the design integration and support of advanced technology in the market sectors of mining and industrial; defence and aerospace; internet of things and sensors; and cybersecurity”.
Looking forward, the group, which is led by CEO Alan Dickson, said it expects strong free cash flow generation in the second half and an improved financial performance, which should continue into the 2023 financial year. – © 2022 NewsCentral Media