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Reunert delivers double-digit growth

22nd November 2023

By: Natasha Odendaal

Creamer Media Senior Deputy Editor

     

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JSE-listed Reunert’s financial results for the year ended September 30, 2023, show double-digit increases in earnings on the back of strong growth from its electrical engineering and applied electronics segments.

During the year under review, the company reported a 14% increase in profit for the year to R959-million.

Attributable profit increased 11% to R919-million, while segmental operating profit increased 28% to R1.46-billion.

Headline earnings a share increased by 16% to 602c, while basic earnings a share increased by 11% to 578c apiece.

The group's revenue increased by 24% to R13.78-billion.

The electrical engineering segment, boosted by the power cable and circuit breaker businesses, achieved a 14% increase in revenue to R7.2-billion, while operating profit increased by 27% to R552-million.

“The volumes in the power cable business increased and the product mixes improved in both Zambia and South Africa. The combined effect of higher factory loading, improved operational efficiencies and a better product mix led to improved margins,” said Reunert Group CEO Alan Dickson in the company’s financial statements for the year under review.

Further, the circuit breaker business generated good product sales in South Africa, as well as in most of its export markets, with the overall volumes augmented by an improved margin performance as supply chain costs eased and the impact of the price increases of the prior year were realised.

“The segment remains well positioned as the overall infrastructure investment in South Africa is predicted to increase slightly in 2024,” he continued.

The applied electronics segment performed well during the 12 months to September 30, 2023, achieving a 51% growth in segment revenue to R3.6-billion and a 163% surge in operating profit to R432-million.

This emerged as the segment’s defence revenue reached a multi-year high and the demand for the segment’s renewable energy products and solutions remained positive.

The renewable energy cluster produced a 24% increase in revenue to R1.1-billion, amid continuing positive market growth conditions, driven by record levels of loadshedding that increased the sales of residential and small commercial batteries, and the private sector investment into solar energy as an alternative to expensive and unreliable grid power.

“The expansion of the market has led to an increase in competition, both in terms of an increase in the number of competitor products but also in the pursuit of the skilled human resources required to operate the businesses.”

The company now owns 57 MW of operating, work-in-progress and near-financial-close assets and has a strong commercial and industrial pipeline.

“The management teams performed well and delivered an excellent operational performance as they created operational leverage and delivered strong year-on-year improvement in financial performances at the Radar, Fuze and Encryption businesses,” said Dickson, adding that the segment was further bolstered by the results of Etion Create, which was acquired with effect from October 1, 2022, and materially contributed to both the segment’s revenue and growth.

Meanwhile, the ICT segment increased its revenue for the period under review by 18% to R3.1-billion, with segment operating profit increasing 2% to R660-million.

“The financial performance of the ICT segment was negatively affected by record levels of loadshedding, which reduced the minutes sold by the electronic communications network by 17%; the sale of R250-million of the Quince loan book to fund the acquisition of Etion Create; and the South African Post Office being placed under business rescue, all of which resulted in a reduced segment operating profit,” explained Dickson.

However, according to the group, the finance rental company performed well, +OneX accelerated its digital integration solutions income and Skywire leveraged its national broadband connectivity network to deliver year-on-year operating profit performances.

Edited by Creamer Media Reporter

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