Reunert reports R331 million six-month profit

Reunert has reported a 7% growth in profit after tax to R331 million for the six months ended 31 March 2022.

It also reported an 11% growth in group revenue to R5.1 billion and a 4% growth in operating profit.

At the time of publication, Reunert’s share price was trading up from a R38.49 low on Wednesday, before the results were published, to R39.03.

The company said it was pleased with the result, considering the environment.

It said there was 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.

These factors all adversely impacted input costs.

Its growth was negatively impacted by the industry-wide, three-week wage strike in the Electrical Engineering segment.

According to Reunert, the strike reduced output capacity by around 14% for the first half of its 2022 financial year, reducing the segment’s operating performance.

CBI — electrical and telecoms cables

Reunert’s electrical engineering segment includes CBI, which produces electrical and telecommunications cables.

Its operating profit decreased by 7% to R151 million.

Nanoteq, Omnigo, and BlueNova

Its applied electronics division includes Nanoteq, Omnigo, and BlueNova.

Nanoteq specialises in the design, development and industrialisation of cryptographic products for cybersecurity and cyberdefence.

Omnigo is an electronic contract manufacturer with a specialised production facility for printed circuit board assemblies.

BlueNova develops and manufactures energy storage systems focusing on Lithium Iron Phosphate chemistries.

This segment saw operating profit increase by 77%, to R55 million, after export permits were released at the beginning of 2022.

The increased sales mainly came from Fuchs, Reunert’s electronic fuze business, which offers mechanical design and high-volume production of electro-mechanical assemblies.

Nashua, ECN, SkyWire, and +OneX

Reunert’s ICT holdings include Nashua, ECN, SkyWire, and +OneX.

“The ICT segment delivered an operating profit in line with expectations, with segment operating profit increasing by 4% to R305 million,” the company stated.

Reunert said its communication businesses, ECN and Skywire, maintained their profitability compared to the first half of its previous financial year.

This was despite minute demand declining due to the economic environment and the adverse effects of load-shedding.

Reunert also noted that there were indicators for goodwill impairment at several cash-generating units.

These included Skywire, Omnigo, Nanoteq and Reutech Communications.

No impairments were required at 31 March 2022, but it reported some sensitivities.

Using a standard accounting model assuming a 5% reduction in forecast revenue and no intervention from management, it reported additional impairments could be required, as follows:

  • Nanoteq — R18 million
  • Omnigo — R67 million
  • Skywire — R73 million

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Reunert reports R331 million six-month profit