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Reunert ups dividend as it reports record demand for defence products
Wednesday, 22 November 2023

Engineering and electronics group Reunert has upped its 2023 dividend by 11% after robust demand for defence products helped offset higher interest rates, as well as some pressure on clients as a result of load shedding.

Revenue rose 24% to about R13.8 billion in the year to end September and profit 14% to R959 million, it said on Wednesday, a result achieved despite a more than doubling of finance charges to R120 million.

Reunert upped its dividend 11% to R3.32 per share, equivalent to about a R615 million payout, and also expressed optimism about its 2024 year.

Valued at about R11.5 billion on the JSE, Reunert has a portfolio of businesses in electrical engineering, ICT and applied electronics.

The group said defence revenue reached a multiyear high, and the demand for the segment’s renewable energy products and solutions remained positive, helping operating profit in its applied electronics business to surge 163% to R432 million.

The group, among other things, makes fuses and stabilised weapon platforms, also developing and manufacturing search and tracking radar systems. Reunert said on Thursday it maintained a record defence order book.

Weak economic conditions and load shedding, however, added on pressure in its ICT business, affecting its small and medium-sized enterprise customer base, with operating profit only growing 2% to R660 million despite 18% revenue growth.

This segment, for example, includes its Electronic Communications Network (ECN) business, which has negotiated wholesale termination rates with the national telephone networks and can provide customers with voice services at discounted prices. Minutes sold fell 17% amid record load shedding, the group said.

Reunert's electrical engineering segment fared better, growing operating profit 27% to R552 million, with the company reporting a strong performance from its power cable and circuit breaker businesses.

The outlook for this business is good as well, the group said, given on-going private investment into renewable energy and the strengthening of export demand for circuit breakers.

The group's shares were up almost 1% in afternoon trade on Wednesday and have gained more than a third in the past twelve months.