Reunert’s acquisitions bode well

JSE-LISTED company Reunert said yesterday that the acquisitions it had made in the past 18 months as well as new export contracts should lead to improved earnings in the future.

The group said the five acquisitions came at a cost of R751 million to the company and that included debt and minority interests assumed.

“These acquisitions, with the exception of Zamefa, are all early life-cycle and innovative businesses which are expected to achieve higher revenue growth than in the traditional Reunert businesses. Their contribution to the group’s operating profit should also develop positively as these businesses mature,” the group said.

Reunert manages a portfolio of businesses in the fields of electrical engineering, information, communication and technology (ICT) and applied electronics.

In addition to the acquisitions, the group said it would benefit from an improvement in export orders received during this period, which would 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,” the company said.

The Electrical Engineering and ICT segments, which increased their profits by 20 percent and 11 percent, respectively, in the six months to end March were expected to contribute significantly going forward.

“Our expectations are that real growth for the year will be achieved, provided the economic and political environment does not deteriorate materially and that no major disruption occurs during the tri-annual wage negotiations in the metals industry,” the group added.

In the results the group reported an increase of 10 percent in revenue to R4.42 billion, up from R4.02bn reported in 2016.

Operating profit increased by 9 percent to R616 million, up from R564m, while headline earnings per share improved by 1 percent to 275 cents a share, up from 271c as compared to 2016. The company said these results were a reflection of reduced economic growth and increased rand volatility. During the period Electrical Engineering continued its strong performance with revenue up 31 percent and operating profit up by 20 percent.

The board declared an interim ordinary dividend of 120c a share, up from 113c declared in 2016.

Reunert shares closed 1.55 percent higher at R72.22 on the JSE yesterday.