Reunert increases HEPS by 31%
Tuesday, 10 May 2005
Electronics and electrical group Reunert has continued its strong financial performance growing headline earnings per share for the six months to March 2005 by 31%. Turnover increased by 9% to R3,3 billion and operating profit improved by 28% from R340 million to R433 million.
An interim dividend of 52 cents per share was declared, an improvement of 30% for the same period last year.
Reunert chief executive Gerrit Pretorius said all businesses with the exception of defence, benefited from the favourable economic conditions. Strong consumer demand fuelled by low interest rates boosted the performance of the consumer division. The electrical group gained greatly from the increased spends on infrastructure. Telecommunications is holding its own, while the troubled defence industry is unlikely to improve, he said.
The reduced number of ordinary shares in issue following the share buyback completed in 2004 contributed 9% to the growth in headline earnings per share.
Positive cash flow from the group’s operations increased the group’s cash resources to R318 million in spite of higher tax and dividend payments made during the period under review.
SPARKLING RESULTS FROM ELECTRICAL DIVISION
Buoyant market conditions in the electrical sector contributed significantly to the good growth in the electrical engineering division. Turnover increased by 31% to R877 million and containment of expense levels and increased volumes resulted in a 49% increase in operating profit.
African Cables, which has entered into an empowerment deal with Powerhouse Utilities in December last year, maintained its growth in earnings as the market for power cables remained firm. Municipalities continued upgrading and expanding their electrical infrastructures.
Circuit Breaker Industries performed well. The upbeat residential market and the acquisition of Heinemann Electric in Australia in July last year contributed to earnings and profit growth. Demand from the mining sector has not grown, as the strength of the rand continues to affect this industry.
Although the market for telecommunication cables remained subdued, ATC traded profitably for the six months under review.
The electronics division grew turnover by 7% to R3,1 billion and operating profit by 2%.
Nashua and Nashua Mobile contributed positively to group profits. Demand for consumer & commercial products remained strong in a highly competitive marketplace. Unit sales have increased substantially, and despite a reduction in selling price, rand turnover growth has been achieved.
Associate company Siemens Telecommunications profits were down slightly reflecting the effect of the strong rand. The order book, nevertheless, remains firm.
Defence division Reutech continues to suffer from a low order intake and reported a small loss of R4 million. However, with continued effort from management, profitability should be restored.
With the exception of Reutech, the group’s operations are expected to enjoy buoyant market conditions. “Reunert should continue to deliver real headline earnings growth,” Pretorius said.
Reunert also announced that longstanding chairman Derek Cooper has resigned as chairman and non-executive director from the board with effect from 31 May 2005.
Pretorius said: “We have the greatest appreciation for the invaluable contribution Derek has made during his longstanding involvement with Reunert. The board respects his decision to step down as chairman and member of the board mainly due to his commitments as chairman of Standard Bank of South Africa.”
Cooper was appointed chairman of Reunert in May 1999 after he became chairman of the company for the first time in the mid 1980’s, when it still formed part of Barlow Rand.
Martin Shaw, chairman of the Reunert audit committee, has been appointed as the new chairman. In addition, Kingsley Fuller has been appointed as non-executive director and will assume the role of chairman of the audit committee. Kingsley is the current chairman of the Board of Trustees of Deloitte & Touche Pension & Provident Fund.
All appointments are effective 1 June 2005.