Reunert flags big earnings decline

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Reunert flags big earnings decline

Published Date: 2020-11-19 | Source: Stephen Gunnion | Author: Stephen Gunnion

Reunert flags big earnings decline

The electrical engineering, electronics and ICT group says free cash flow generation was in line with historic ratios despite the tough environment.

Reunert has guided investors to expect a big drop in full-year earnings due to the difficult trading environment of the past year. However, it says its fourth-quarter performance was better than expected as operations normalised following the Covid-19 lockdown.

In an operational update and trading statement, the company said core operating profit for the year to end-September was likely to be 34% to 40% lower than the R1.38 billion reported last year. Earnings per share (EPS) for the year were expected to be down by as much as 95% while headline EPS would be between 78.5% and 81.3% lower. It said the generation of free cash flow was in line with its historic conversion ratios despite the tough environment.

As well as Covid-19, its performance was negatively impacted by a poor performance at its Electrical Engineering segment following a seven-week labour disruption at African Cables in the first quarter of its financial year; foreign exchange losses due to the deterioration in the value of Zambia's kwacha; and weak infrastructure investment demand across its key Southern African markets. On top of that, there was a once-off abnormal credit write-off due to an external fraud perpetrated against Quince, its in-house rental finance provider.

Reunert said all three of its segments performed well and were profitable during the fourth quarter. Electrical Engineering and Applied Electronics delivered strong quarterly results while ICT continued to improve steadily as more segments of the economy returned to normality.

Reunert expects to release its results on 24 November. Its shares rose 4.5% to R41.72 yesterday.





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