RMH is concerned about structural imbalances in the country

RAND MERCHANT Investment Holdings (RMH) yesterday said that while the South African economy was expected to recover moderately this year and next year due to higher commodity prices, growth would be constrained if socalled structural imbalances were not addressed.

The company said the structural imbalances that needed to be addressed included high-profile corporate failures as well as critical water shortages in various parts of the country.

“The South African economy has already experienced a positive impact as a result of the improved domestic political environment, most notably in the strengthening in the local currency and improved business confidence,” the company said.

“That, together with the broad-based upturn in the global economy, has improved the prospects for gross domestic product (GDP) growth. However, a number of major hurdles still remain.”

In the six months ended December 31, RMH’s normalised earnings increased 7 percent to R4.2 billion, while normalised earnings per share rose from 275.4 cents per share to 295.2c. RMH increased market capitalisation – the total market value of all of a company’s outstanding shares – by 19 percent from R93.7bn to R111.8bn.

In the six months, RMH increased its interim dividend by 10 percent from 153c per share to 168c per share. Net asset value per share, company’s total assets minus its total liabilities, increased 8 percent to 3 022.4 cents a share.

RMH’s main interest is its 34 percent investment in JSElisted FirstRand, which on Tuesday reported a 7 percent increase in earnings.

Momentum SP Reid analyst Brian Mugabe said yesterday that, following Tuesday’s release of FirstRand’s interim results, RMH’s numbers did not come as a surprise. “We knew what to expect based on the performance of FirstRand. RMH’s property business is still relatively small,” said Mugabe.

RMH’s shares closed 0.18 percent lower at R44.72 on the JSE yesterday.