Listed electronics company Reunert expects earnings to increase in the second half of the year, after net profit leapt by 97% in the first half of the year.
The company says revenue for the first half of the year to March improved 2%, to R5.2 billion, despite its decision to exit the consumer business of Nashua Electronics. Operating profit grew by 4%, to R604 million, and profit after tax leapt 97%, to R795 million.
Reunert ended the six months with cash of R1.3 billion, after buying back shares worth R1.1 billion. Its cash base was buoyed by a R794 million injection after it sold out of Nokia Siemens Networks.
“Should the current market conditions continue, Reunert's second half performance can be expected to exceed that achieved in the first six months and earnings should increase,” says CEO Nick Wentzel.
Telecommunications cables had a disappointing first period, with revenue remaining flat and operating margins decreasing, because of reduced throughput in the factory. “We should see an improvement in the second half, after receiving an order that was delayed for the long-haul fibre networks and an improved order book,” Wentzel says.
Nashua performed well in quiet market conditions, with revenue remaining constant at R3.4 billion, while operating profit increased 8%, to R315 million, says Reunert.
The office automation operations experienced increased unit sales over the previous period, but had no growth in revenue in a competitive market, the company says. Prices to the market were reduced as a result of the strong rand.
The franchises owned by Nashua performed well and contributed positively to the division's profitability. Its strategy of purchasing larger franchises continues, and majority shares were acquired in the Tygerberg, Paarl and West Coast franchises during the period, says Reunert.
Nashua Communications achieved pleasing results after it was incorporated in the business 17 months ago. The expected benefits of adding Panasonic's PABX business to its portfolio were achieved, the company says.
Nashua Mobile continues to perform satisfactorily despite the reduction in interconnect rates. The total contract base increased by 6%, to 824 396. Revenue and operating profit were in line with the previous period.
Quince, Nashua's financing operation, performed well after a few difficult years. The operation is now focused on its core business of financing office automation and telecoms customers. Bad debts have reduced to minimal levels.
Reutech's revenue was 20% down on the previous period, at R308 million, with operating profit decreasing by 35%, to R14 million, after an export order, which is still expected during the year, did not materialise.
Related story:
Reunert earnings leap on Nokia sale