Reunert lifts H1 operating profit by 18%

Reunert, the JSE-listed ICT group on Monday reported a 10% rise in revenue to R5.7 billion for the six months ended March 2012, from R5.2 billion before.

The group pointed to a 14% increase in normalised headline earnings per share to 298 cents from 261 cents in March 2011.

Headline earnings per share reflected growth of 16% to 304 cents compared to 263 cents in the prior year.

Operating profit rose by a healthy 18% to R736.1 million, from R625.5 million in 2011.
Reunert announced a gross cash dividend per share of 95 cents, from 77 cents per share before.

“Increased revenue was achieved in all our business segments, with Reutech and CBi-electric being particularly strong. Operating profit grew by 18% to R736 million. The margin improvement was achieved through productivity and process improvements,” the group said in a statement.

Nashua grew revenues by 7% to R3.6 billion, off a high base, whilst operating profit grew by 20% to R403 million compared to R336 million in 2011.

It said that Nashua Mobile produced a “satisfactory result”, although it was affected by the loss of LCR revenue, slower turnover growth caused by the drop in interconnect rates and a market that is approaching saturation.

“The prepaid data market continues to grow strongly off a low base. Net connections increased by 35, 000 in the six month period. These contracts, however, are generally at lower subscription rates. Despite the lack of growth in revenue, operating profit increased as a consequence of cost control and productivity gains,” Reunert said.

The group noted that Quince had a sound six months with a marginal increase in the asset rental book. Operating profit increased slightly due to continued containment of bad debts.
The business continues to finance Nashua group customers, it said.

“Nashua ECN is performing at expected levels. The conversion of the Nashua Mobile
LCR base to the ECN VoIP platform is in progress. The number of voice minutes on the ECN network continues to grow, with volumes exceeding 60 million minutes per month,” Reunert said.

Looking ahead, the group said that the continued volatility in global markets provided an unpredictable backdrop for the South African economy. “Reunert has experienced reasonable demand for most of its products and services in the electrical segment in the first six months. Our telecoms environment in the mobile side remains challenging but our VoIP offering, and associated services, are reflecting encouraging growth off a low base. We are anticipating continued growth in Reutech.”

The ICT firm said that international economic events unfolding daily, amidst considerable uncertainty, were having a knock-on effect in emerging markets and forecast that the environment would be more challenging in the next six months. “Subject to prevailing economic conditions not deteriorating, we believe that the group will reflect earnings growth for the full year, but we anticipate a lower rate of growth for the full year,” Reunert said.

In late afternoon trade on The JSE, shares in the group was a fraction off (9 cents) to R66.90.

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Reunert lifts H1 operating profit by 18%