Reunert blames slower economy for earnings fall

Shares in listed ICT group Reunert declined in afternoon trade on Friday (3 May), after the group says it expects to see a fall in interim earnings.

The group, which is behind the Nashua brand, says it expects earnings per share and headline earnings per share for the six months ended March 2013, will be between 13% and 17% lower than in 2012, citing a slower local economy.

Shortly before 13h00, shares in the group fell 2.54%, or R2.03, to R77.97 on the JSE, some way off its 52 week best level of R87.91 (March 13), but giving the company a market cap of R15.66 billion.

Reunert says normalised headline earnings per share will be between 12% and 16% lower than the corresponding reporting period of the previous year.

In its interim period in 2012, Reunert reported normalised headline earnings per share to 298 cents, while revenue increased by 10% to R5.7 billio.

Operating profit grew by 18% to R736 million and the group increased its interim dividend to 95 cents per share

The key reasons for the decline in earnings are:

  • The impact of a generally slower economy;
  • Delays in various external infrastructure roll-outs that have affected the CBi-Electric segment;
  • The port and transport sector strikes in October 2012 affected production volumes within CBi-Electric due to late delivery of raw-materials; and
  • The decrease in the interconnect rates affected the viability of the least cost router (“LCR”) product offering in our mobile telecommunications business. LCR was still a significant profit contributor in the equivalent period last year.

“The combination of these factors has resulted in lower revenue for the six months and a consequent decrease in earnings,” Reunert said.

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Reunert blames slower economy for earnings fall