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Reunert’s acquisition of IQBusiness and a strong pipeline is boosting the group’s confidence that it can report improved financial performance for the 2024 financial year, even as local economic conditions have battered a number of its business units. 

Reunert, which is valued at about R12.95bn on the JSE, has operations that include the design and manufacturing of electrical conductors, cables and accessories, as well as ICT-related services for businesses. It also has niche businesses that cover communications and radar systems.

On Wednesday, the electronics company said it ­“continues to expect that an improved financial result in 2024 can be delivered”.

While the pressure facing SA businesses has increased since its 2023 financial year-end, the group said its results were expected to be positively supported by the incorporation of IQ Business and its subsidiaries’ results for a full 12 months. The company’s bottom line is expected to benefit from positive defence cluster sales on the back of the strong order book and “solid” electrical engineering growth.

The group — established more than 130 years ago — has three segments: electrical engineering, which includes power and telecom cables; ICT; and applied electronics, which includes renewable energy solutions and radars.

In 2023, the group finalised a deal to take a 74.2% stake in IQbusiness, one of SA’s largest management and technology consulting firms. It employs more than 1,000 people and generates more than R1bn in revenue annually, offering insights, consulting and contracting across consumer convergence in the financial services, retail and telecommunications sectors and the manufacturing industry.

Reunert recently announced plans to merge IQbusiness and its +OneX business unit to create a single brand.

The company said it had faced a number of challenges in the six-months ended March 2024. This included supply backlogs caused by port delays.

Unfortunately, parts of its Nashua business were unable to resolve the logistics challenges in the period, which resulted “in a noteworthy shortfall of imported product and led to a large reduction in sales and operating profit in the period, which negatively impacted the ICT segment’s and group’s results”.

The electronics company is one of a handful of companies that weathered the fallout from Eskom’s load-shedding, thanks to its investments in renewable energy and supply contracts with the power sector. Its solar energy business had a strong performance as build rates, margins and solar energy assets under ownership all improved.

However, the group saw margins contracting in its battery storage business as the industry has become saturated. 

Despite the challenges, the group said the remainder of its businesses performed well. 

Revenue for the period increased 7% year on year to R6.6bn and operating profit improved 9% to R674m, driven by strong results in the electrical engineering segment and defence cluster in the applied electronics segment.

Profit rose 13% to R475m and headline earnings per share (heps) advanced 8% to 289c. The group declared an interim dividend of 90c per share, up 8.4%. Net cash held from R1.171bn at the end of September 2023 to R1.299bn at March end. 

Reunert shares were up 4.71% by 2pm on Wednesday at R69.99. The share is up 18.2% so far in 2024.

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