Reunert (RLO) H2 2024 earnings summary

Executive summary

• Achieved 7% increase in operating profit to ZAR 1.53 billion and 8% growth in profit to ZAR 1.04 billion year-over-year, despite challenging South African macroeconomic conditions.

• Headline earnings per share rose 10% to 665 cents; total dividend increased by 10% to 366 cents per share, with a 4.5% yield.

• Free cash flow of ZAR 1.22 billion, supporting a 41% total shareholder return for the year and a three-year TSR CAGR of 24%.

• Strategic focus on digital integration, renewable energy, and international expansion drove growth.

• Share buyback of 2.3 million shares, reducing shares in issue by 1.2%.

Financial highlights

• Group revenue increased by 5% year-over-year to ZAR 14.45 billion, with non-South African revenue up 21% to ZAR 4.9 billion.

• Electrical Engineering segment revenue up 7% to ZAR 7.68 billion; ICT segment revenue up 27% to ZAR 3.9 billion.

• Applied Electronics segment revenue declined 10% to ZAR 1.85 billion due to battery storage market collapse and deconsolidation of Terra Firma.

• Operating profit improved by 7% to ZAR 1,531 million; profit before tax up 11% to ZAR 1,311 million.

• Basic EPS up 13% to 652 cents; diluted EPS up 7% to 610 cents; HEPS up 10% to 665 cents.

Outlook and guidance

• Growth in 2025 expected, with first half remaining challenging and growth biased toward the second half due to phasing of export Defence contracts and high-voltage orders.

• Battery storage business expected to return to profitability in H2 2025; normalization of supply chains and port operations anticipated.

• Defence Cluster has 75% of 2025 target order book already covered.

• Solar energy business expected to sustain profitability; battery storage faces continued headwinds.

• Cautious optimism on South African economic recovery; H1 FY25 expected to remain challenging.