Reunert's ICT segment struggled, with revenue dropping almost 3% for the year ended 30 September, to R3.3 billion.
The group says this was due to tough economic conditions, which resulted in weaker unit sales, offset by an increase in average selling prices ? in part due to a weaker rand and a strategy of moving the sales mix towards more expensive units.
Reunert manages a diversified portfolio of businesses in the fields of electrical engineering, ICT and applied electronics. The JSE-listed group operates mainly in SA, with minor operations in Australia, Lesotho, Sweden, the US, Zambia and Zimbabwe.
Overall group revenue from continuing operations increased by 2.5% to R8.5 billion, helped by strong growth of 39% in the applied electronics segment, to R1.5 billion. The electrical engineering segment remained flat with profit of R4.1 billion.
Overall headline earnings per share (HEPS) dropped 3% for the year to 570c, while HEPS from continuing operations were down 1% compared to a year ago.
Reunert says operating profit from continuing operations of R1.3 billion was a 12.7% increase year-on-year. A final cash dividend of 326c per ordinary share was declared, an almost 8% increase on a year ago.
Highs and lows
In terms of the electrical engineering segment, Reunert's energy cable unit's operating profit was in line with that of the prior year, despite a 7.8% decline in revenue due to changes in product mix and the delay in the award of key infrastructure projects. The company says its telecommunications cable business "enjoyed an excellent year on the back of the roll out of the national fibre to the home programme".
"The low voltage business benefited from the closure of its underperforming solutions unit at the end of 2015. The business offset muted local volumes through an excellent export performance. Its Australian operations continued to be impacted by the global downturn in commodities, whereas its North American business performed strongly. The circuit breaker business launched several new products, which bodes well for the future," the company says in its results announcement.
For the ICT segment, the number of office automation units sold was down on the prior year, although an improvement in product mix yielded an increase in the average selling price.
"Our voice business, ECN, continued to increase its market share by securing a continuous stream of new customers, resulting in the sale of 1.1 billion voice minutes. Future revenue should reflect the impact of this positive growth now that the last interconnect rate reduction became effective in October and the regulated floor has been reached."
The applied electronics segment showed the strongest performance driven by major export orders, most of which were completed in 2016. The radar business continued to innovate its product line, launching the latest version of its mining surveillance radar and a new handheld radar for assessing faults in the ceiling of underground stopes.
On the defence side, significant effort was made to secure future research funding but due to the delay in certain key programmes in the current year, revenue and profit were below those of the prior year.
"This unit is, however, well positioned for the future due to marketing efforts undertaken in the current year," Reunert says.
However, the tactical communication business had a difficult year as it industrialised its new production processes and expanded production lines, from three to eight, to accommodate the new multi-year Radiate contract. The impact of full production is expected to be realised from the second quarter of the 2017 financial year.
"The progress made in the execution of the group's strategy yielded pleasing results with the conclusion of three complementary acquisitions that should deliver geographically diversified revenue streams and provide good growth opportunities," it says.
The company believes that in 2017, the second half of the year is likely to be stronger than the first half, as its export businesses return to full capacity on the back of expected new orders.
"We have made good progress on the execution of the group strategy, underpinned by our ongoing programme of strategic acquisitions, positioning the group positively for growth."
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