Electronics group Reunert increased headline earnings per share by 14% in the six months to 31 March, declaring an interim dividend of 32c per share, up from 30c in the previous period.
The group posted a 23% increase in turnover and operating profit rocketed by 63%.
However, rand volatility and the contribution of the associate companies affected its overall performance, with one of its companies, telecommunications cable manufacturer ATC, having an uncertain outlook.
Earnings before interest, tax, depreciation and amortisation (EBITDA) as a percentage of turnover improved from 9.8% to 12.5%. The group`s net cash position improved by R58 million.
Reunert CEO Gerrit Pretorius says the volatility of the rand against the dollar had a severe impact on Siemens Telecommunication`s profit contribution. Hedging mechanisms have been put in place to avoid a repeat of these losses. Almost 50% of the group`s turnover is affected by the dollar.
The office system businesses, Nashua, the Finance Company and Royce Imaging, posted higher turnover and profits than a year ago.
Consumer products and systems increased turnover by 13% and operating profit by 48%, due to a strong performance by Nashua Mobile. The merger of the cellular interests of Nashua and Nedtel has successfully been bedded down with Nashua Mobile stabilising its cost structure and improving its profit margins.
However, Pretorius says the consumer market remains highly competitive and the strengthening of the rand is putting additional pressure on margins of Panasonic products.
Following on orders secured last year, Reutech produced excellent growth with a 450% increase in operating profit, although from a low base. Most of the orders received were dollar denominated and it is unlikely that the performance will be matched in the second half, says the company.
"The low-voltage electrical engineering company, CBI, produced operating profit growth of 48% with the demand for its local residential products exceeding expectations. Export targets have been affected by the downturn in international markets. However, there are some positive prospects from the number of international inquiries received," says Pretorius.
<B>Salient figures</B>
Reunert results for the half-year to 31 March 2003.
Previous interim figures in parentheses, move in square brackets:
Revenue: R3.04b (R2.46b) [+23%]
Operating profit: R333.3m (R205.1m) [63%]
Profit before tax: R354.5m (220.6m) [+61%]
Profit after tax: R124.8m (R220.6m) [+61%]
EPS: 102.1c (93.7c) [+9%]
HEPS: 115.4c (101.2c) [+14%]
Cash: R338.7m (R197.5m)
@SidebarBrief = Reunert results for the half-year to 31 March 2003.
ATC`s position has weakened further in line with a continuing slump in demand for both optical fibre and copper cables worldwide. ATC produced a loss for the six months under review. Pretorius said the outlook for this business was uncertain and of concern.
African Cables, which supplies power cables, enjoyed buoyant demand for its products. Turnover growth and continued improvements in efficiencies and sound control of overheads, resulted in a significant improvement in profits.
The operations managed directly by Reunert performed particularly well in the first six months. Should the rand stay at current levels, the rate of growth in profits in the second half of the year for these businesses will be substantially lower than that achieved in the first half.
Pretorius says associate company Siemens Telecommunications should perform better in the second half. Nevertheless, profits will be significantly lower than those achieved last year.
Assuming some weakening of the rand, growth in headline earnings per share for the year is expected to be modest.
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