Reunert continues solid performance; HEPS increases by 51%
Tuesday, 16 November 2004
Johannesburg – Electronics and electrical engineering company Reunert Limited today announced a 51% increase in headline earnings per share from 184 cents to 278 cents per share for the year ended 30 September. This significant improvement stems from good performance by the group’s managed operations as well as a return to profitability by associate company Siemens Telecommunications. A final dividend of 120 cents (2003: 88 cents) per share has been announced, resulting in a 33% (160 cents per share) increase on the total dividend of the previous year.
The year was marked by exceptionally strong cash generation allowing the company to buy back 10% of the issued shares from all ordinary shareholders. An amount of R477 million, of which R230 million is deemed a special dividend, was returned to shareholders in September 2004.
“Over the last five years, headline earnings per share have grown at a compound rate of 19% a year and we have returned some R2 billion to our shareholders,” said chief executive Gerrit Pretorius. Reunert’s return on equity improved from 31% to 51% in the past year.
The stronger rand impacted on group turnover growing which grew by R143 million to R6,2 billion. Interest received increased significantly, mainly due to continued strong internal cash flow and the sale of the finance book in December 2003. At the financial year-end Reunert had R281 million cash excluding the finance company borrowings.
The electrical engineering division, consisting of Circuit Breaker Industries (CBI) and cable manufactures ATC and African Cables, grew its revenue by 7% to R1,5 billion rand. African Cables in particular has benefited from the current building boom in South Africa and the demand for power cable networks to be upgraded in large parts of the country. Equipment is currently being installed at African Cables to increase capacity.
CBI has grown its export sales by 38% and the recent acquisition of Heinemann Electric in Australia will provide the necessary base for growth in that region. ATC continues to operate in a subdued market, although tentative signs of a revival in demand started to appear towards the end of the year. The company was recently awarded part of the new Telkom optical fibre contract and delivery has commenced.
The electronics division’s turnover remained flat but operating profit improved by 71% to R656 million. The office systems business that includes Nashua and its associated finance company continued its strong performance and reported a 44% increase in operating profit.
Consumer products and services which includes Reunert Consumer and Commercial Holdings (RC&C) and Nashua Mobile increased turnover by 6% to R3,4 billion with a 44% increase in operating profit. This improvement was mainly due to RC&C being able to adjust to the strong rand. Trading in Panasonic products has been good and margins have been more acceptable. The introduction of the Futronic brand as a lower-priced alternative, backed by the benefits of lower interest rates, is proving successful.
Nashua Mobile had another good year with contract subscribers increasing to 361 000.
Telecommunications showed a significant turnaround to R130 million in operating profits compared to a loss of R65 million last year. This was mainly due to Siemens Telecommunications returning to profitability after losses incurred on a contract in 2003. Reunert has a 40% stake in Siemens Telecommunications.
Siemens Telecommunications has been appointed as sole supplier of Vodacom’s UMTS (third generation) network technology which will offer consumers high speed access to information and communication services.
Defence division Reutech’s performance has been disappointing with operating profit reducing from R118 million to R49 million. Order intake this year did not meet expectations with both exports and profit being negatively affected by the strong rand.
“We are confident that Reunert will achieve continued earnings growth in the new financial year. Focus remains on ensuring longer-term sustainability growth in earnings per share,” Pretorius commented on Reunert’s prospects.