POWER cables and telecommunications equipment manufacturer yesterday posted a 28% drop in operating profit to R1,1bn for the year ended September, blaming it on the global financial turbulence.
The group warned in a stock exchange filing that its order books remained low but appeared to have stabilised.
Reunert had undertaken extensive restructuring to size its businesses appropriately. “We continued our programme of capital expenditure to improve plant efficiencies,” it said.
The group’s telecommunications cable joint venture with had a good year, with both revenue and operating profit up, mainly due to increased demand for copper telecommunications cable. But fibre demand was subdued, although the medium-voltage business enjoyed strong growth, albeit off a low base.
The group’s investment in Nokia Siemens Networks locally suffered a decline in revenue and profit, with attributable earnings before tax slumping 31% from R139m to R97m. It blamed the decline on lack of demand and competitive pressures that were unlikely to abate.
Overall group revenue also took a hit, slipping 6% to R10,3bn from R10,9bn as a result of the economic slump.
Both earnings and headline earnings per share were down marginally — to 652,4c from 650,1c and to 651,6c from 651,9c respectively.
But Reunert managed to improve its strong financial position, with cash holdings at the end of September amounting to R1,6bn, reflecting effective management of working capital.
The group’s Reutech division had a good year, fuelled by exports at favourable exchange rates, with revenue up 40% to R874m, while the division’s operating profit rose 55% to R212m.
“Our radios, radars and fuses are now supplied to many countries around the globe. The mining surveillance radar, a safety product that we have developed, is being sold or leased to most multinational mining companies in increasing numbers,” the group reported.
But Reunert warned that although prospects were good, there was a risk that orders might not be received early enough for the full benefit to be realised in the new financial year.
Revenue and operating profit at Nashua, the office automation business, declined 1% to R6,4bn and 27% to R481m respectively. The group said bad debts as a percentage of revenue improved from 1,3% to 1,2%.
It said prospects for Nashua were closely tied to the prosperity of consumers.
mokopanelet@bdfm.co.za