Huge boost: Remgro CEO Jannie Durand says the increase in revenue is mainly due to sales to other oil companies being hampered by the transport strike. Picture: FINANCIAL MAIL
Huge boost: Remgro CEO Jannie Durand says the increase in revenue is mainly due to sales to other oil companies being hampered by the transport strike. Picture: FINANCIAL MAIL

Investment giant Remgro endured a tough six months to the end of December — but the group’s unlisted industrial portfolio showed its mettle in the interim period.

An investment presentation on Friday showed Remgro’s industrial hub — which carries an intrinsic value of about R11bn — chipped in a solid R426m to headline earnings.

The star performer was the 24.9% stake in oil company Total SA, which doubled its contribution to headline earnings to R102m despite only a slender increase in sales to R26.7bn.

Remgro CEO Jannie Durand said the increase in revenue was mainly due to sales to other oil companies being hampered by the transport strike.

But he said Total SA’s results were positively affected by lower stock revaluation losses of R156m (last year a loss of R802m) due to a decrease in the average basic fuel price during the interim period.

Another surprisingly strong performer was Remgro’s 100%-owned building supplies specialist Wispeco, which saw revenue up 9% to R1.16bn and operating profit up 32% to R132m. The contribution to Remgro’s headline earnings was R90m — 67% higher than the interim period in 2015.

Durand said Wispeco’s revenue growth resulted from slightly higher selling prices as well as higher sales volumes.

He said that sales margins were higher than expected due to the volatility in raw-material costs — but said that the
situation was recently reversed as world-wide primary aluminium prices rose.

Remgro also saw encouraging results from 37.7% owned glass business PGSI, which has proved a difficult investment for the group in recent years

The perennially profitable industrial gasses business Air Products — in which Remgro holds a 50% stake — managed a 6% hike in revenue to R1.45bn and a 2.3% increase in operating profit to R436m. Air Products contributed R151m to Remgro’s headline earnings, a 6.3% improvement on the previous interim period.

Durand said Air Products experienced difficult trading conditions with depressed demand for the company’s products in most sectors -especially in packaged gases.

Remgro also saw encouraging results from 37.7% owned glass business PGSI, which has proved a difficult investment for the group in recent years.

PGSI pushed up revenue 6.5% to R2.1bn with normalised operating profit coming in 18% higher at R159m. The contribution to headline earnings was R25m – nearly 40% up.

Durand said PGSI’s results were helped by positive growth in the building and automotive industries as well as profitable growth in the African markets.

Remgro also benefitted from a huge turnaround in its 34.9% investment in empowerment company KTH, which donated R58m to headline earnings after a hefty loss of R260m in the 2015 interims.

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