Reunert on Monday reported a 10% lift in revenue for the interim financial period ended March 2018, to R4.84 billion, however, group operating profit declined by 8% to R567 million.
The JSE-listed group manages a diversified portfolio of businesses in the fields of electrical engineering, information communication technologies (ICT) and applied electronics. Brands under management include Nashua, SkyWire and Pansolutions.
Reunert said that diluted headline earnings per share declined 5.6% to 270 cents per share.
It said that revenue growth was primarily driven by a 25% increase in revenue from the applied electronics segment arising from its new segment subsidiaries and a large export order book.
“Revenue in the electrical engineering segment increased marginally due to higher metal prices, offset by a substantial reduction in revenue in our telecom cable joint venture and the impact of the stronger rand. Revenue in the ICT segment increased in line with inflation, despite the deflationary pressure of the stronger rand, driven by positive sales volumes,” it said.
The primary drivers for the decrease in operating profit were:
- The lower margin achieved on export sales and lower earnings from our foreign operations due to the appreciation in the average USD/rand exchange rate achieved in the period, which directly impacted profitability;
- The material reduction in demand from SOEs and municipalities which adversely impacted capacity utilisation and margins in the electrical etngineering segment; and
- The reduced manufacturing activities in Zamefa because of Zambia’s ongoing liquidity constraints.
Reunert said that the ICT segment’s revenue increased by 4% to R1.67 billion with another strong improvement in its operating profit which increased by 14% to R317 million as a result of increased volumes, improved margins and accelerated new customer deals as the segment continued to successfully implement its ‘total office provider’ strategy.
“The positive momentum built through the successful execution of the total office provider strategy, together with the firmer exchange rate continues to benefit the office automation business.
“The business was able to provide better pricing into the franchise channel leading to a further increase in both its market share and the number of higher capacity/higher margin units sold which contributed to a substantial increase in profitability,” Reunert said.
The segment’s voice over internet business continued to attract a significant number of new customers and thereby grow its annuity business although this was partially offset by a reduction in minutes utilised per customer due to the weak economic climate, Reunert said.
“Good progress was also made in preparing this business for the provision of data connectivity to its customers,” it said.
Reunert declared an interim/total cash dividend per share of 125 cents, up from 120 cents previously.