Reunert to be back in the black
Listed electronics group Reunert says it expects to report positive earnings for the six months to March, from its previous loss. It expects to report basic earnings per share of 177c-211c from a loss of 172c for the prior comparative period.
Listed electronics group Reunert says it expects to report positive earnings for the six months to March, from its previous lossmaking position.
The group, worth about R9bn, has operations that include the design and manufacturing of a comprehensive range of electrical conductors, cables and accessories, as well as ICTrelated services for businesses.
On Wednesday, Reunert said it expects to report basic earnings per share of 177c-211c, compared with a loss of 172c for the prior comparative period.
Headline earnings per share, which strips out the effects of one-off financial events, have also moved positively, from a loss of 76c previously to an expected range of 185c-201c.
Reunert, which is more than 130 years old, said its overall financial results for the period have improved notably compared with the prior period.
However, the recovery in operating profit to pre-Covid-19 levels “continued to be negatively affected by the reduced economic activity associated with the pandemic, specifically during the second wave” in January and February.
Reunert swung into a loss of R327m for the six months to March 2020, from profit of R377m previously, amid writedowns, including those arising from the predicted impact of the coronavirus and highly uncertain future economic conditions.
At the time, the firm impaired assets by more than R50m and expected a decline in its electrical engineering business.
By the end of the financial year, Reunert reported a 77.4% drop in operating profit to R307m with headline earnings per share of 115c from 573c and earnings per share of 29c from 490c. Revenue was down 24.9% to R8bn.
The group attributed the fall to the underperformance of the electrical engineering division and the one-off credit write-off at its in-house rental finance business Quince Capital, after a forensic investigation into fraudulent activities by an independent third party dealer.
A year on, the group’s fortunes are looking more positive.
Operating profit for the group’s segments in the current period, before impairment of financial assets, reflected an increase in performance, the company saying this was largely in line with the guidance provided in its 2020 financial yearend results.
Reunert said it experienced a recovery in profitability for its electrical engineering and ICT units as the performance was “in line with expectations”.
The applied electronics business was negatively affected by lower than anticipated export sales and a stronger rand.
Reunert’s stock has been trending upwards in 2021, up 31% to date. The group’s shares were 3.66% weaker at the close of trade on Tuesday at R48.46.