Reunert Says Nashua Hit By Ports Chaos

Technology and industrial group Reunert has reported an 8% improvement in interim headline earnings per share (Heps) and a 7% rise in revenue, showing that it's weathering a tough macroeconomic environment.

Heps for the six months to 31 March 2024 rose to R2.89 from R2.67 in the same period a year ago, while revenue rose to R6.6-billion, from R6.2-billion previously.

Reunert - whose businesses include Nashua, ECN, CBI-electric and SkyWire - said the 'solid results" show it's delivering on its financial, operational and strategic initiatives.

However, the numbers would have been more impressive had Nashua not been impacted by the logistics crisis at South Africa's ports.

Nashua was "unable to resolve the logistics challenges during the first half of the 2024 financial year, which resulted in a noteworthy shortfall of imported products, and this led to a large reduction in sales and operating profit in the period, which negatively impacted the ICT segment's and group's results".

A high level of sales in the second quarter of the 2024 financial year and the investment in working capital required to address the ports congestion resulted in a R201-million increase in working capital.

Also negatively impacting the numbers for the 2024 interims was competition in the 'saturated" market for residential and small commercial batteries, which resulted in margin compression in Reunert's Battery Storage business. This business has since been restructured to take advantage of opportunities in the large battery market.

Despite these two challenges, the remainder of the group performed well, Reunert said. A 9% improvement in group operating profit was driven by good numbers from its electrical engineering segment and the applied electronics segment's defence cluster.

"The group continued to generate strong free cash flow, which resulted in a decrease in net interest paid and helped boost profit for the period by 13% to R475-million, it said. After absorbing the impact of the working capital investment, the group generated free cash flow of R476-million (from R298-million a year ago).

Reunert declared an interim gross dividend of 90c/share, up from 83c previously. The shares were changing hands 3.6% higher on Wednesday, shortly before markets closed in Johannesburg. - © 2024 NewsCentral Media