Johannesburg - Electronics group Reunert’s annual results beat market expectations with the group again achieving double digit growth. Its shares gained 4.29 percent on the JSE to close at R64.14 yesterday.
Reunert for the year to end September reported a 17 percent increase in normalised headline earnings per share to 662 cents per share from the previous corresponding update.
“Reunert delivered an increase of 12.7 percent in operating profit from continuing operations to R1.32 billion. The improvement follows on from the 14.7 percent increase achieved in 2015, reflecting two years of double digit earnings growth from our core operations,” the group said.
The group’s revenue increased by 2.5 percent to R8.5bn, while earnings before interest, tax, depreciation and amortisation rose by 12 percent to R1.4bn.
“The 2.5 percent increase in group revenue was leveraged to a 12.7 percent increase in operating profit through improved margins. This can be ascribed to the positive impact from applied electronics arising from large export orders and a good performance in the electrical engineering segment,” the group said.
Reunert acquired Omnigo in December last year and a 75.39 percent shareholding in Metal Fabricators of Zambia in February -in line with its acquisition strategy. The board declared a gross final cash dividend of 326c per ordinary share, up by 7.95 percent.
Equity structure
The company highlighted that it was addressing transformation.
“We took concrete action in ensuring our businesses have the appropriate equity structures to participate in the local markets. We concluded the new black economic empowerment equity ownership transaction in our electrical engineering segment. The equity transaction in the applied electronics segment is progressing according to schedule,” it said.
Peter Takaendesa, a portfolio manager at Mergence Investment Managers, said the full-year results came out ahead of market expectations and also ahead of previous guidance provided by the company.
“The market was expecting 10 percent to 12 percent headline earnings per share growth and the company has reported normalised earnings per share growth of 17 percent. The dividend has been increased by 8 percent and in addition they have announced their intention to buy back up to 9 million shares as the company has more than R2 billion of excess cash after selling its Nashua mobile business,” Takaendesa said.
He added: “It’s a strong result relative to market expectations, its peers and also in the context of weaker economic growth in South Africa. The operating environment in South Africa remains a challenge, but Reunert’s outlook statement is also fairly optimistic.”
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