JSE-listed technology group Reunert has increased its revenue by 5% to R14.4 billion, from R13.8 billion in 2023.
The company today announced its financial results for the year ended 30 September, saying operating profit was up by 7% to R1.5 billion (2023: R1.4 billion).
According to the company, attributable profit rose by 8% to R1.03 billion (2023: R959 million) and headline earnings per share went up by 10% to 665c (2023: 602c).
Total dividend per share increased by 10% to 366c (2023: 332c) and free cash flow stands at R1.2 billion.
Reunert is a South African company that manages a diversified portfolio of businesses in the fields of electrical engineering, information and communication technologies, as well as defence and allied technologies.
“Reunert delivered another improvement in financial performance in what was a challenging macro-economic environment in South Africa,” says the company in a statement.
Highlights included the strong growth in the defence cluster; increased Zambian power cable performance; the successful integration of IQbusiness; and the strong resilience of the group’s businesses serving the South African market, which delivered good operational efficiencies and tight margin control, it notes.
In the electrical engineering segment, Reunert adds, the power cable businesses delivered an excellent increase in financial performance. It says the Zambian business increased volumes, improved margins, realised operational efficiencies and delivered most of the improvement in operating profit.
Powering up
In South Africa, the firm notes that the power cable business secured steady volumes, but suffered from reduced high voltage power cable contracts as projects were delayed by key customers.
It points out that the circuit breaker business volumes were stable in South Africa, while export volumes increased in the second half of the year, specifically into the key US market.
The ICT segment delivered a solid performance underpinned by the solutions and system integration cluster, where the integration of IQbusiness, together with another year of double-digit growth at +OneX, drove the financial performance, it says.
After interruptions in the supply chain, caused by challenges at the country’s ports, Nashua’s performance returned to normal in the second half of the financial year and it delivered results in line with those of the second half of the prior year when there was uninterrupted supply.
According to the company, Quince’s collections remained stable and yielded good financial returns despite SA’s weak economy and high interest rates.
In the applied electronics segment, it says, the defence cluster delivered a good financial performance.
“The defence businesses executed on healthy order books successfully and very positive financial performances were achieved at the fuse, radar and logistics businesses,” Reunert explains.
“These achievements were made possible through excellent operational performances that increased recoveries, improved margins and managed costs.”
In the renewable energy cluster, the solar energy business had a strong performance with a record build of new solar plants, it adds.
Importantly, says the firm, the increased focus on deal management and execution yielded positive results as margins improved.
It points out that the well-publicised commoditisation, over-stocking and reduction in demand in the R&SC battery storage market severely impacted the battery storage business.
“These financial results are underpinned by the acceleration in the execution of the group’s strategy, which drives our growth trajectory and focuses on three key areas, namely: digital integration in the ICT segment, renewable energy and the expansion of our international income streams,” says Alan Dickson, Reunert group CEO.
“The ICT segment’s digital integration strategy has been a significant success as they have unlocked growth across both public and private sector digitalisation projects. The successes are evidenced by several key wins.
“The business has consistently grown market share through the addition of new, blue-chip enterprise clients and by driving cross-sell and upsell opportunities, thereby increasing wallet share in existing clients.
“Our internationalisation strategy, underpinned by defence and electrical engineering revenues, provides a significant income stream to augment our South African revenues. The execution of the group’s strategic growth initiatives, supported by our solid core businesses, are accelerating and an increase in financial contribution is expected in the years ahead.”
Free cash flow
Adds group CFO Nick Thomson: “Over the last three years, we have generated free cash flow of R3.1 billion, raised R1.3 billion in debt and realised R229 million from the proceeds of the sale of property, plant and equipment, resulting in a total of R5 billion being available to the group.
"After the allocation of capital within the group and distributing over 50% of free cash flow to our shareholders as dividends, the residual cash balance is sufficient to meet the final dividend for 2024 and provide the resources to continue the pursuit of our strategic initiatives.
“Positively, the deployment of this capital has resulted in the group’s return on capital employed improving from 14.5% in 2021 to 17.7% in 2024. Our strong balance sheet, significant unutilised banking facilities, continued positive cash generation capacity and ability to return funds from Quince to re-invest into higher yielding opportunities positions the group well to continue to execute its strategy and to generate positive cash returns for our shareholders.”
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