JSE-listed Reunert has posted a dip in earnings for the first six months of the current financial year.
During the six months ended March 31, the company maintained headline earnings per share (HEPS) of 275c, while normalised HEPS dropped 5% from 292c in the first half of 2017 to 276c in the half-year under review.
Profit for the period under review contracted 4% to R448-million, while operating profit before interest, dividends and empowerment transactions decreased 8% to R567-million.
The decrease in profitability is attributed to the strengthening of the rand against the dollar, which impacted on the group's profitability on 30% of its foreign currency denominated revenue; an unprecedented reduction in demand from State-owned enterprises and municipalities; and Zambia's ongoing liquidity constraints.
“These factors resulted in the operating profit in the electrical engineering segment declining significantly and the applied electronics segment's operating profit remaining flat despite a 25% increase in revenue,” the company said in its financial results report on Monday.
The information and communication technology (ICT) segment achieved a 14% increase in operating profit from increased volumes, improved margins and accelerated new customer deals.
Group revenue for the half-year to March 31 increased 10% to R4.84-billion, driven by a 25% increase in revenue from the applied electronics segment.
“The group expects an improved performance in the second half of the financial year, subject to there being no material changes to the macroeconomic conditions,” Reunert assured.
“The expectation is supported by the strong export order books of the applied electronics segment, our anticipation of some improvement in volumes and product mix in the electrical engineering segment and the contribution of the ICT segment's performance, reinforced by the contribution from the acquisition of SkyWire,” it concluded.