JSE-listed technology group Reunert has disposed of its battery storage business Blue Nova after load-shedding eased in South Africa.
This emerged when the company today announced its interim financial statements and cash dividend declaration for the six months ended 31 March.
In a statement to shareholders, Reunert says the battery storage market continued to be extremely weak.
It notes that the residential and small commercial battery storage market remained constrained in the absence of load-shedding, while the large battery storage market experienced slow order receipts and increased competition.
“These factors resulted in the board resolving to dispose of Blue Nova, as it no longer supports the group’s strategic and financial objectives,” says the firm.
The announcement comes as South Africa is seeing a temporary reprieve from load-shedding, as power utility Eskom halts power cuts, thanks to improved generation capacity.
Earlier this month, the utility announced the suspension of stage two load-shedding after successfully bringing 1 175MW back online, with an additional 1 850MW expected to return soon.
According to Eskom, this improvement is the result of better plant performance and a significant drop in unplanned outages.
Looking ahead, Eskom’s Winter 2025 outlook is cautiously optimistic, with plans to avoid load-shedding through August – provided unplanned breakdowns remain below 13 000MW.
At the height of load-shedding, Reunert’s renewable energy business witnessed phenomenal growth as organisations and households looked for alternative energy sources.
While the battery storage business struggled, Reunert has revealed its solar energy business had a "pleasing first half, as good deal selection, margin management and build rate delivered an improved performance".
However, the company notes it faced macro-economic challenges in South Africa during the reporting period.
Despite these headwinds, it says, the group remained resilient, underpinned by its diversified business portfolio and strong operational execution.
The electrical engineering and ICT segments delivered operating profits largely in line with the prior comparative period (H1 FY24), despite weak market conditions, Reunert adds.
It points out that a delay of a major defence contract, into the second half of this financial year, reduced demand in the South African power cable market, the continued underperformance of the battery storage business (which has consequently been classified as held for sale), and the non-recurrence of COVID-19 insurance proceeds received in H1 FY24 negatively impacted the group’s profitability.
Among the key highlights of the reporting period, Reunert’s group revenue decreased by 5% to R6.2 billion (H1 FY24: R6.5 billion). Operating profit went down by 16% to R585 million (H1 FY24: R697 million), and the company had free cash flow of R211 million (H1 FY24: R476 million);
Reunert declared an interim dividend of 90 cents per share.
Group CEO Alan Dickson says: “Reunert, both historically and currently, is resilient in such challenging and volatile environments, and has a track record of generating growth and consistent cash generation through the business cycles.
“The group’s prudent capital allocation and strong cash generation has resulted in a very strong balance sheet. The group has the capacity and flexibility to invest in our companies to achieve both the strategic and operational objectives, whilst delivering sustainable returns to shareholders via steady dividends at a healthy dividend yield.”
Says group CFO Mark Kathan: “The group’s cash position remained strong throughout the period. Reunert’s balance sheet remains robust, with cash of R1.079 billion and significant undrawn banking facilities of R1.87 billion.”
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