Remgro’s headline earnings plummet

Remgro’s headline earnings fell 40% in the six months to end-December in what the investment holding company called “an incredibly challenging operating environment”.

The firm, which has investments in energy, healthcare, fibre, financial services and food, reported that headline earnings declined by 40.1% to R2.1bn, while headline earnings per share (HEPS) decreased by 39.1% to 381c.

The difference of 100 basis points (bps) in the HEPS measure compared with headline earnings represented the accretive effect of shares repurchased during the 2023 financial year and the period under review, the company said.

The group said SA’s energy constraints, inefficiencies in transport and logistics, slow pace of economic and structural reforms, and a general erosion of foreign investment confidence in the country were felt across its portfolio companies.

The interim period was characterised by consolidation and optimisation after Remgro’s shift towards a larger unlisted portfolio in 2023.

A significant driver of the decline in headline earnings related to the effect of recent corporate actions, the majority of which were non-recurring items, it said.

The difficult operating environment, particularly in relation to the trading results of Heineken Beverages, also contributed to the material decline in headline earnings.

These corporate actions and their effect on headline earnings include the IFRS 3 amortisation and depreciation charges of R178m relating to the additional assets identified when Heineken Beverages obtained control over Distell and Namibia Breweries.

Remgro’s portion of the negative fair value adjustment made by TotalEnergies on its Natref stock for the period under review amounted to R377m, due to Natref being classified as held for sale in terms of IFRS 5.

Excluding the impact on headline earnings of the corporate actions, the headline earnings decreased by 13.1%, it said.

Total earnings amounted to a loss of R2.39bn compared with a profit of R3.95bn a year ago. This decrease was mainly due to the R3.5bn impairment of Remgro’s investment in Heineken Beverages and the group’s portion of the impairments of Heineken Beverages’ goodwill that was created through the Distell-Heineken transaction of R1.8bn. For the 2023 financial year, Remgro accounted for a profit on disposal of R3.4bn in respect of the Distell-Heineken transaction.

Remgro’s intrinsic net asset value per share decreased by 4.6% to R236.95 by end-December. An unchanged interim dividend of 80c per share was declared out of income reserves.
 
mackenziej@arena.africa