JSE-listed Reunert grew headline earnings per share (HEPS) by 20.2% from 115.4c to 138.7c in the six months 31 March despite a marginal decline in revenue from R3.05 billion to R3.01 billion.
CEO Boel Pretorius says the HEPS improvement was mainly the result of a strong turnaround in profitability at Siemens Telecommunications (Sietel), ATC and Panasonic. "Revenue did not reflect the higher volumes in most areas of operations due to price decreases related to rand strength," he says.
However, Reutech`s sales and profitability dropped during the six months, mainly because of a cyclical decline in orders. The strong rand had a negative effect on margins in the export-dependent businesses.
More impressive was the group`s cash generation, with R1.46 billion cash generated from operations, compared with R257.5 million a year earlier. Cash on the balance sheet has risen from R180 million to R688.8 million.
Pretorius says Sietel, Panasonic and ATC are expected to contribute positively in future. "With the exception of Reutech, all the other businesses are experiencing satisfactory trading conditions.
"The rate of increase in headline earnings per share in the second half is likely to be higher than that achieved in the first half."
The group, which owns 31.7% of CS Holdings (CSH), is in talks with that company`s board that could result in Reunert making an offer to buy CSH at 35c a share. Yesterday Enterprise Outsourcing Holdings said it also intended to make an offer for CSH.
"No impairment has been raised on the investment in CS Holdings as the amount cannot be determined at this time," says Pretorius. "The matter should crystallise by year-end and any impairment will be taken into account at that time."
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