Reunert eyes boost from acquisitions

Electronics group Reunert expects its recent acquisitions to achieve higher revenue growth than its traditional businesses.

In the past 18 months, Reunert spent R751m to buy five companies that are all, except for Zambia-based wire and cable manufacturer Zamefa, in early life-cycle and are all innovative businesses, Reunert said. “Their contribution to the group’s operating profit should also develop positively as these businesses mature,” it said.

Reunert operates in the electrical engineering, information and communications technology (ICT) sector through companies such as ECN and Pansolutions, and also in applied electronics through companies such as Radar and Tactical Communications.

The group expects to benefit from an improvement in export orders received during the six months to March, which will reflect in the second-half’s profit as these export orders translate into sales. “This, together with the enhanced output in our tactical communication business, should lead to an improved second-half operating profit in the applied electronic segment.”

Moreover, the group expects real growth for the year “provided the economic and political environment does not deteriorate materially and that no major disruption occurs during the triannual wage negotiations in the metals industry”.

The applied electronic segment reported flat revenues and a 50% reduction in operating profit. Reunert’s total revenue increased by 10% to R4.4bn and operating profits increased 9% to R616m. Headline earnings per share eased up 1% to 275c. Revenue from ICT fell 5%, while operating profit rose 11%.