Reunert raises dividend by 4%
DURBAN – Despite Reunert reporting a 16 percent decline in profits for the six months to end March, shareholders in JSE-listed group can expect a 4 percent higher dividend.
Reunert manages a portfolio of businesses in the fields of electrical engineering, information communications technology (ICT) and applied electronics.
The group released its results towards the close of the market, reporting that its profit after tax slumped to R377 million, down from R448m compared to last year, negatively impacted by two non-recurring items.
The group said it had successfully defended an action brought by the SA Revenue Service, which allowed the group to release a R42m tax provision resulting in an abnormally low tax charge of 21 percent.
Reunert also disposed of its controlling shareholding in Prodoc Svenska (Prodoc), the group’s Swedish office automation business.
“The rationale for this disposal was the consistent low earnings from this business and the weakened strategic alignment of the business with the broader ICT segment strategy. This disposal realised a loss of R44m,” the group said. It declared an interim dividend of 130 cents, up by 4 percent compared to last year’s 125c.
Despite the decline in profits, the group reported that its revenue increased by 9 percent to R5.29 billion, up from R4.84bn, and operating profit increased by 8 percent to R615m, up from R567m compared to last year. The group said the increase in revenue and operating profit was achieved despite a weak economic environment in South Africa and continued subdued demand, specifically in the electrical engineering segment.
Normalised headline earnings per share declined by 8 percent to 253c a share, down from 276c, while basic earnings per share declined by 17 percent to 227c, down from 275c compared to last year. Its electrical engineering segment experienced depressed demand from key state institutions, but it managed to lift revenue by 14 percent to R2.78bn, while operating income increased by 3 percent to R225m.
The ICT segment increased revenue by 3 percent to R1.72bn, while operating profit increased by 11 percent to R351m. The applied electronics segment increased its revenue by 16 percent to R999m, while operating profit increased by 39 percent to R85m.
Looking ahead, the group said the recent results from the national election and the anticipated improvements that were likely to occur, should be positive for business confidence, foreign direct and local investment and improved management of state owned entities and municipalities. “All of these factors are positive for the Reunert investment case,” the group said.
Reunert's share price closed 1.16 percent higher at R73.50 on the JSE on Monday.