JSE-listed Reunert reported a double-digit decline in earnings as its Electrical Engineering (EE) segment’s underperformance overshadowed the growth of its other units during the six months ended March 31.

The group posted a 186% contraction during the six months under review, plunging its operating profit of R377-million in the comparative period last year into the red with a loss of R326-million.

Earnings a share contracted 176% into a loss a share of 172c, while a headline loss a share of 76c, a drop of 130%, was reported for the six months to March.

“Reunert experienced challenging trading conditions in the first half period. Despite these conditions, the Information, Communication and Technology (ICT) segment delivered real growth in operating profit while the Applied Electronics segment performed in line with expectations,” the company said.

“However, the Electrical Engineering segment suffered material underperformance primarily as a result of a seven-week labour disruption at African Cables, significant foreign exchange losses at Zamefa in Zambia, and weak cable infrastructure investment demand across our key Southern African markets.”

Earnings before interest, taxes, depreciation and amortisation contracted 29% to R493-million.

During the first half of 2020, group revenue fell 22% to R4.1-billion, operating profit was down 39% to R374-million and free cash flow contracted 43% to R355-million.

“The group's financial results were also adversely affected by impairments, arising from the predicted impact of the Covid-19 pandemic and the resulting highly uncertain future economic conditions,” it said.

“These impairments were raised in terms of the forward-looking requirements encapsulated in International Financial Reporting Standards. The group also suffered an abnormal item in the form of an external fraud.”

The EE segment's revenue decreased 37% to R1.7-billion, with an operating loss of R42-million, compared with the first half of 2019’s profit of R225-million.

The ICT segment's operating profit rose by 6% to R371-million, despite revenue decreasing by 13% to R1.49-billion during the six months to March.

The Applied Electronics segment performed in line with expectations as revenue increased by 4% to just over R1-billion and profit decreased by 9% to R77-million.

Reunert declared a dividend of 65c apiece for the period.