Reunert (RLO) H1 2025 earnings summary

Executive summary

• Revenue from continuing operations declined 5% to ZAR 6.218 billion, impacted by weak South African macroeconomic conditions, deferred defense contracts, and absence of prior year COVID-19 insurance proceeds.

• Operating profit fell 16% to ZAR 585 million, with profit after tax down 19% to ZAR 401 million; basic EPS from continuing operations was 243c, down 18%.

• The sale of the loss-making battery storage business (BlueNova) was concluded, classified as a discontinued operation, with a net loss of ZAR 112 million.

• Interim dividend maintained at 90c per share, with a 6% yield on a 12-month rolling basis.

• Group remains resilient with strong cash generation, prudent capital allocation, and a robust balance sheet.

Financial highlights

• Revenue from continuing operations decreased by 5% year-over-year to ZAR 6.2 billion; group revenue including discontinued operations down 6% to ZAR 6.253 billion.

• Profit after tax declined 19% to ZAR 401 million; operating profit from continuing operations fell 16% to ZAR 585 million.

• HEPS and EPS from continuing operations declined by 20% and 18%, respectively; total headline EPS down 21% to 227c.

• Free cash flow decreased to ZAR 211 million; cash and cash equivalents decreased by ZAR 753 million, mainly due to dividend payments and working capital build.

• Net loss from discontinued BlueNova operation was ZAR 112 million (net of tax).

Outlook and guidance

• Second half expected to be significantly stronger, driven by delivery of deferred defense orders and continued growth in ICT and renewable energy.

• Electrical engineering segment likely to match 2023 performance, with local infrastructure investment ramping up in 2026.

• Defense cluster anticipated to deliver multi-year growth, supported by a robust export order book and favorable FX rates.

• ICT segment expected to deliver year-on-year growth; renewable energy to maintain robust performance, though at a slower growth rate.

• Group expects significantly improved H2 FY2025 results and free cash flow in line with historic norms.