Reunert has reported improved financial performance for the six months ended 31 March 2023 – and equities analyst Irnest Kaplan said it’s because all three of the group’s segments are doing well at the same time.
“ICT is perhaps not performing as well as the cable and electronics sectors, but it’s not terrible. And if you look at the history of the group, it’s not always been like that,” Kaplan told TechCentral.
“At some stage, one was doing well and not the other two, but now all three are performing well and it’s showing a strong outlook for the rest of the year,” he said.
Highlights for the 2023 half-year period include:
- Group revenue up by 21% to R6.2-billion (R5.1-billion previously);
- Group operating profit up by 39% to R625-million (R449-million); (SANDRA TO CHECK)
- Attributable earnings up by 30% to R412-million (R316-million);
- Headline earnings per share up by 37% to R2.67 (R1.95); and
- Interim dividend per share up by 11% to 83c (75c).
Reunert performed well across all three operating segments, with the earnings growth resulting from the electrical engineering and applied electronics segments delivering excellent operational performances.
The ICT segment delivered in line with expectations. Revenue increased by 11% to R1.4-billion (R1.3-billion), while segment operating profit increased by 4% to R318-million (R305-million).
The increase in segment operating profit was adversely impacted by the sale of R250-million of Quince’s lease and loan receivables book, which was deployed to acquire Etion Create. This offset an otherwise pleasing performance from the remainder of the ICT segment companies.
Under the Nashua brand, the “total workspace provider” business benefited from an easing of the supply-chain challenges experienced in the previous financial year. These improvements allowed the business to service robust demand from its key small and medium business customer base and improved product volumes.
There was strong growth in operating profit in the solutions and systems integration cluster, reflecting the acquisition of a cybersecurity capability. Reunert is also in the process of acquiring IQbusiness, subject to approval by the Competition Commission.
IQbusiness will add technology and management consulting capabilities, as well as research and insight analytics. Together with +OneX, the businesses should enhance Reunert’s positioning in the ICT market.
Watch | Alan Dickson on why Reunert is thriving
Reunert’s applied electronics segment had a strong first half, with revenue up 49% to R1.6-billion (R1.1-billion) and segment operating profit increasing by 196% to R163-million (R55-million). Growth in the applied electronics segment was driven by strong exports and demand for renewable energy products.
Good orders
All the defence businesses experienced strong performances on the back of the good orders secured in the 2022 financial year. Orders were appropriately executed and strong performances were experienced by Secure Communications, Etion Create, Logistics and Radar; and Fuze again delivered a solid financial performance.
The demand for the renewable energy cluster’s products and services accelerated as intensified load shedding continued to plague the country and drove the private sector to seek alternate energy sources, including storage (batteries from Blue Nova Energy) and solar PV (from TerraFirma Solutions).
“The only slight reservation, if one was to be very critical, is the group’s cash position,” said Kaplan. “They’ve invested a lot in capital and the cash position is not quite where we’d like it, but perhaps it’s just a timing issue.” — © 2023 NewsCentral Media
