Remgro’s half-year earnings take a knock on investees’ reduced profits
REMGRO’S half-year earnings took a knock due to Covid-19, which hit investee companies such as Mediclinic International and FirstRand.
As a result, the investment holding company yesterday reported a 52.6 percent decline in headline earnings from continuing operations to R1.4 billion, and headline earnings per share from continuing operations fell 52.7 percent to 247.4 cents a share for the six months to the end of December, significantly affected by the decreased contribution of Mediclinic and no earnings from FirstRand.
Mediclinic reported an 83 percent decline in earnings for the six months to the end of September last year and included the full impact of the Covid-19-related lockdown measures on its results.
Mediclinic’s contribution to Remgro’s headline earnings declined 80.2 percent to R170 million, from R858m last year.
The group said, as a result of the Covid19 pandemic, FirstRand did not pay any dividends during the period compared with the R548m it received from the financial services group last year.
“Excluding Mediclinic and FirstRand, the rest of Remgro’s investment portfolio had a resilient performance during the Covid-19 pandemic, with their contribution to Remgro’s headline earnings decreasing by only 7.7 percent,” the group said.
Revenue from continuing operations increased 7.91 percent to R34.06bn, and profit from continuing operations declined 58.43 percent to R1.25bn, while intrinsic net asset value per share increased 4.9 percent to R161.98 a share.
The group declared an interim dividend of 30c, down from 215c last year.
Remgro has a wide net of investments that includes other listed companies such as Distell, RCL Foods and Rand Merchant Investment Holdings and unlisted companies such as Community Investment Ventures Holdings Air Products and Siqalo Foods.
RCL Foods increased its contribution to Remgro’s headline earnings by 14.5 percent to R411m during the period after it reported a 30.6 percent increase in underlying headline earnings for the six months to the end of March, despite incurring Covid-19 specific costs of R120m.
Distell contributed R428m to Remgro’s headline earnings, which was up 11.5 percent compared with last year, while RMI’s contribution to Remgro’s headline earnings decreased 3.2 percent to R488m.
Remgro said the second wave of Covid-19 in the second half of 2020 hit South Africa harder than expected. “While the pandemic and lockdown measures have had a widespread direct and indirect impact on most of Remgro’s underlying investee companies, its portfolio has shown resilience and has given it confidence that it is well positioned to weather this storm and overcome the unique challenges that this crisis presents,” the group said.
Remgro shares closed 1.73 percent lower at R100.03 on the JSE yesterday.