Reunert reports 18% increase in HEPS
Tuesday, 17 May 2011
Reunert today reported a strong increase for its first six months in headline earnings per share of 18% to 262,7 cents per share. The performance was partly due to the company buying back 19,2 million or 9,7% of its shares. Normalised headline earnings per share increased 9% to 260,7 cents from 238,9 cents for the six months ended 31 March.
"Revenue increased by 2% despite the group's decision to exit the consumer business of Nashua Electronics," Reunert chief executive Nick Wentzel, who was appointed new CEO in August last year, said. Operating profit grew by 4% to R604 million and a continued focus on productivity improvements lifted the EBITDA margin by 2% to 12,7%.
Basic earnings increased by 97% due to an abnormal profit of R346 million that was realised after Reunert opted to sell its shares in NSN to the controlling shareholder for R794 million in January.
Reunert ended the six months with available cash of R1,3 billion after the buyback of shares to the value of R1,1 billion, offset by the sale of its 40% stake in NSN for R794 million. An interim dividend of 77 cents per share was declared; an improvement of 15% from 67 cents per share a year ago. The board intends over time to narrow the difference between the interim and final dividend.
CBI-electric's revenue increased by 14% to R1,5 billion due to strong demand for certain electrical products, as well as increased exports into international markets. Operating profit increased by 16% to R253 million.
The demand for energy cables continued at same levels as in the previous period. The price of copper remained at premium levels with increased efficiencies contributing to better gross margins.
The low voltage business experienced strong demand for its products from international markets. Exports increased to 33% of revenue driven by exports to Australia, the USA and Europe. Strict cost control and efficiency also led to improved margins.
Telecommunications cables had a disappointing first period with revenue remaining flat and operating margins decreasing because of reduced throughput in the factory. "We should see an improvement in the second half after receiving an order that was delayed for the long haul fibre networks and an improved order book," Wentzel said.
Nashua performed well in quiet market conditions with revenue remaining constant at R3,4 billion while operating profit increased by 8% to R315 million.
The office automation operations experienced increased unit sales over the previous period but had no growth in revenue in a competitive market. Prices to the market were reduced as a result of the strong rand. The franchises owned by Nashua performed well and contributed positively to the division's profitability. The strategy of purchasing larger franchises continues and majority shares were acquired in the Tygerberg and Paarl and West Coast franchises during the period.
Nashua Communications achieved pleasing results after it was incorporated in the business 17 months ago. The expected benefits of adding Panasonic's PABX business to its portfolio were achieved.
Nashua Mobile continues to perform satisfactorily despite the reduction in interconnect rates. The total contract base increased by 6% to 824 396. Revenue and operating profit were in line with the previous period.
Quince, the Nashua's financing operation, performed well after a few difficult years. The operation is now focused on its core business of financing office automation and telecoms customers. Bad debts have reduced to minimal levels.
Reutech's revenue was 20% down on the previous period at R308 million with operating profit decreasing by 35% to R14 million after an export order, which is still expected during the year, did not materialise.
"Should the current market conditions continue Reunert's second half performance can be expected to exceed that achieved in the first six months and earnings should increase," Wentzel commented.
For more information contact
Carina de Klerk
Investor Relations and Communication Manager
011 517 9033
011 517 9035
083 631 5743