Electronics group Reunert, which reported a sharp drop in full-year profits, expects to recover to pre-Covid-19 financial performances as economic activity recovers and the government’s infrastructure expenditure improves, it said on Tuesday.
The group’s operations include the design and manufacturing of a comprehensive range of electrical conductors, cables and accessories, and ICT-related services for businesses.
Reunert said it has recovered from the business interruption of Covid-19, with its fourth-quarter financial and operational performance comparing favourably against the same period last year. In the fourth quarter of its year to end-September, it “achieved 90% of the core operating profit earned in the comparative quarter of the 2019 financial year”, the company said.
“Whilst recognising that there remains much economic uncertainty ahead, the group’s businesses have robust business models,” it said, adding that it serves markets that are anticipated to offer “good structural growth and opportunities”.
Reunert reported a 77.4% drop in operating profit to R307m with headline earnings per share of 115c from 573c and earnings per share of 29c from 490c.
Revenue was down 24.9% to R8bn. It attributed the decline to, among other things, the underperformance of the electrical engineering division and the one-off credit write-off at its in-house rental finance business Quince Capital, after a forensic investigation into fraudulent activities by an independent third party dealer. Covid-19 lockdowns also disrupted its operations.
The company said as a result of the lockdown disruptions and the predicted future impact of Covid-19 on its businesses, it raised provisions for impairments and expected credit losses. Reunert said an investigation has resulted in a credit write-off of R298m.
Revenue at its electrical engineering division decreased by 30.9% to R3.7bn with core operating profit plummeting to R28m from R320m. The ICT business’s operating profit fell by 21.6% to R604m while revenue decreased by 22% to R2.5bn.
Reunert’s share price rose 3.37% to close at R4,114, giving the company a market capitalisation of R7.6bn.
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