Group profile

Reunert comprises a diversified portfolio of businesses in the fields of Electrical Engineering, Information Communication Technologies (ICT), and Applied Electronics. The Group was established in 1888, by Theodore Reunert and Otto Lenz, and has contributed to the South African economy in numerous ways. Reunert was listed on the JSE in 1948 and is included in the industrial goods and services (electronic and electrical equipment) sector of the JSE. The Group operates mainly in South Africa with operations in Australia, Lesotho, Mauritius, the USA, Zambia and Zimbabwe. Reunert’s Head Office is located in Woodmead, Johannesburg, South Africa.

Commentary

Overview

Reunert is pleased to present its results for the six-month period ended 31 March 2022 (H1 FY: 2022), which reflect an improvement in the financial performance on the comparative period in an environment of continued underspend by South African state institutions on electrical infrastructure; increased logistic costs, extended supply chains and global electronic component shortages; and high commodity prices exacerbated by the Russia-Ukraine war, which all adversely impacted input costs.

The Group’s revenue grew by 11% from R4,6 billion in the comparative period to R5,1 billion for the current reporting period, primarily due to the pass through of high metal prices to customers in terms of pricing formula in the Electrical Engineering segment and the growth in export sales in the Applied Electronics segment as the granting of export permits resumed.

The Group’s segmental operating profit increased by 1% to R449 million from R445 million achieved in the six-month period ended 31 March 2021 (H1 FY: 2021). This growth was negatively impacted by the industry-wide, three-week wage strike in the Electrical Engineering segment which reduced output capacity by around 14% for H1 FY: 2022, leading to the reduction in the segment’s operating performance. Positively, the uncertainty of wage negotiations is now behind the Group for the next three years and labour relations have fully recovered from the effect of the strike.

The improved segmental operating profit was due to the increase in operating profit generated by the Applied Electronics segment, as it commenced delivering into new export contracts facilitated by the receipt of the necessary export permits, with the ICT segment delivering a result in line with expectations and the guidance given in 2021.

At the half year, all segments were beginning to benefit from a combination of improving order books and improving sales environments. The return of our Applied Electronics’ sales force’s ability to travel internationally, combined with our customers’ increased focus on defence, has led to a significant improvement in this segment’s order book with several of our businesses in this segment having full order books for the balance of the financial year.

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