Reunert reported a moderate increase in half year revenue and raised its interim dividend despite tough economic conditions and delays in the commencement of various national infrastructure projects.
Revenue from continuing operations increased by 2% to R4 billion, while operating profit increased by 12% to R564 million, for the six months to 31 March.
The diversified ICT, electrical engineering and applied electronics group says the improved financial results are due to moderate growth in operations, a positive impact from exports, cost management and improved efficiencies.
Headline earnings per share (HEPS) increased by 2% to 271c, but basic earnings per share were down 5% from 287c to 272c. The interim dividend increased almost 8% to 113c per ordinary share.
This will be the last interim period that discontinued operations from Nashua Mobile will be reported by the group. This after the subscriber bases were sold off to mobile network operators and Altech Autopage in 2014.
When just looking at continuing operations, HEPS were up 12% to 271c per share.
Rand impact
The company's ICT segment saw a 1% decrease in revenue from continuing operations, to R1.7 billion. Operating profit, however, increased by 2% to R250 million "driven by both efficiency gains and cost control across the segment".
The company says the rapid devaluation of the rand placed pressure on the office automation business, whose market continues to be characterised by strong competition, resulting in ongoing margin pressure. The voice component of this segment continued to grow its base while margins remain intact.
In-house finance company Quince's first half operating results were positive, mainly due to the higher loan book of R2.1 billion, a 4% increase on the prior period. Despite the continued challenging economic conditions, there was no increase in credit losses.
Applied electronics were the bright spot, as revenue grew 64% to R696 million in the six months and operating profit increased to R122 million.
"The solid performance by applied electronics is mainly attributable to large-scale export sales assisted by the weaker exchange rate. The communications and radar businesses delivered in line with expectations."
The electrical engineering segment's revenue, however, was negatively impacted by the delay in the awarding of key projects that are now expected to materialise in the second half of the year. The segment's revenue dropped 7% to R1.8 billion.
The company does not expect economic conditions in SA to improve significantly in the near future. However, it believes it is positioned to deliver real growth in continuing operations for the full 2016 financial year due to "the continued execution of large, base load orders in its applied electronics segment and improved order intake in the electrical engineering businesses".
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