Reunert warns its interim earnings could decline by as much as 179%
JOHANNESBURG - Reunert has warned that its half-year earnings could decline by as much as 179 percent, negatively impacted by the underperformance of its electrical engineering segment and impairments as a result of Covid-19.
The electrical engineering segment was hit by a seven-week labour disruption at the power cable business and this resulted in limited production in the first quarter of the financial year.
In addition, the segment experienced headwinds in Zambia as a result of foreign exchange losses as well as low cable infrastructure investment across the Southern African markets.
As a result, the industrial goods and services company expects to report a loss of between 162 cents a share and 180c for the six months to end March, down from earnings per share (Eps) of 227c reported last year.
The group expects its headline earnings per share (Heps) to decline by between 128 percent and 132 percent, to a loss of between 72c and 80c cents compared to Heps of 253c reported last year.
“The group’s results were impacted by impairments arising from the predicted future impact of the Covid-19 pandemic, embodied in the uncertain future economic conditions, which were required to be raised in compliance with IFRS,” Reunert said.
The group added that its results were also impacted by an external fraud that constitutes an abnormal item.
The abnormal item arose from an external whistleblower report and the ongoing investigation has revealed prima facie evidence that an external party, unrelated to the Reunert group of
companies, has defrauded one of Reunert’s subsidiaries, Quince Capital.
“An independent, comprehensive forensic audit is in process. However, from the evidence extracted to date, a material impairment is considered necessary and has been raised accordingly,” the group said.
Its operating profit was expected to decline by 36 percent and 42 percent, to be between R357 million and R394m, down from last year’s operating profit of R615m, with the reduction in operating profit attributable to the performance of the electrical engineering segment.
Reunert also has two more segments, the information communication technologies (ICT) and the applied electronics, which performed according to expectations in the expected results.
Reunert expects to release its results next week.