Reunert increases revenue by 19% and operating profit by 16%
Friday, 18 May 2007
Electrical engineering and electronics group, Reunert, grew revenue by 19% to R4,6 billion in the first six months to 31 March 2007 compared to the same period in 2006. Operating profit increased by 16% from R524 million to R608 million. Net profit attributable to Reunert shareholders, increased from R412 million to R517 million before accounting for share based payment charges relating to the BEE deal and the issue of shares to employees. An interim dividend of 73 cents per share, up 16 % from last year’s 63 cents per share, has been declared.
Depreciation charges increased as a result of higher capital expenditure to provide for a stronger demand in infrastructure related projects. Interest income, compared with the same period a year ago, declined by 18% due to the payment of a special dividend in December 2006 which, together with STC accounted for R400 million.
Reunert chief executive Boel Pretorius said: “CBi-electric and Siemens Telecommunications performed well on the back of infrastructure developments in South Africa while the defence business Reutech has given a stellar performance. Electronics, however, and in particular, the consumer electronics, has been affected by the gradual slowdown of spending in the consumer market.”
CBi-electric (electrical engineering) grew revenue by 41% from R1,1 billion to R1,6 billion and increased operating profits by 20% from R223 million to R266 million. This performance is mainly due to strong demand for telecommunications and energy cables.
The electronics division increased operating profits by 16% from R386 million to R447 million on a 4% growth in revenue.
Nashua Office Systems had the benefit of a performance bonus on the finalisation of the discounting deal of the finance company and improved profits by 35% from R120 million to R162 million. In a shrinking market, revenue increased by 2% from R565 million to R576 million.
Consumer Products and Services, which include Nashua Mobile and Nashua Consumer, were adversely impacted by slow sales of consumer electronic products. Consequently operating profit declined by 7% from R177 million to R164 million. “Margins are under constant pressure and unlikely to improve in the near term,” Pretorius said. Nashua Mobile increased its subscriber base by 32% to 640 361 subscribers amid signs of increased competition for high-value customers.
Siemens Telecommunications in which Reunert holds 40%, performed well on strong demand from its major customers. Consequently Reunert’s portion of attributable operating profit increased by 23% from R86 million to R106 million. Neotel, the second network operator, should fuel demand for the products and services of this company in the future.
Reutech, the defence business, is well positioned for superior performance this year and grew revenue from R126 million to R202 million. Operating profit jumped from R4 million to R16 million. “Strategic repositioning is nearing completion and a strong order book bodes well for the future,” said Pretorius.
Quince Capital, the venture with PSG in financial services, became effective 1 May 2007. Access to ongoing funding has been put in place and the business is poised for growth. The transaction is expected to marginally dilute financial performance over the next 12 to 18 months.
The BEE deal in which a 10% stake in Reunert has been sold to the Rebatona Educational Trust and Peotona, has been fully implemented. A once–off charge of R596 million has been included in abnormal items on the income statement. “We are confident that tangible value will be added by this partnership,” said Pretorius.
Growth in normalised earnings per share for the full year is anticipated to be in line with the increase achieved in the first six months. (Note: this statement has not been audited or reviewed by the auditors). …/ends
For more information contact
Carina de Klerk
Tel: +27 (0)11 517 9000
Mobile: +27 (0)83 631 5743