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The Electronic and Electrical sector increased in value by 14.5% during the one of the toughest years in financial market history – despite hitting rock bottom in mid-March 2009 at below 12 000 index points – only to pick itself up and ending the year at around 19 800 points.
Although big gun Reunert is responsible for more than of the index’s value with a R11bn market capitalisation it seems sector performance was more of a group effort, taking recovery in the share prices of Altron and Digicore into consideration.
But Reunert still remains the main player and this electronics and low-voltage electrical engineering company delivered a decent set of results for the year ended September 2009, despite difficult trading conditions.
The group reported an operating profit of R1.1bn, down 27% from the prior comparable period’s R1.6bn.
The resultant operating margin deteriorated from 14.4% to 11.1% during the year under review.
Net finance income jumped from R60.3m to R108.2m, resulting in a decline in earnings before tax of only 22%.
Taxed
The taxation expense was 30% lower at R341m, which translated into an effective tax rate of 27.5% for the year under review (2008: 30.4%).
The reduced effective tax rate led to a decline in profit after tax of only 19% to R892m.
No share of profit from associates was posted, against R16.1m in the comparative period as the investment in NSN was no longer accounted for as an associate.
Due to a change in the shareholders’ agreement Reunert now earns commission on sales of NSN products.
Future commissions have replaced dividend flows and, consequently, normalised diluted headline earnings per share dropped by 21%, from 627.9 to 495.3c/share.
Basic EPS, which includes the positive impact (R299m) of the mark-to-market of an option on NSN, rose marginally from 646.9c to 652.4c/share.
A final dividend of 188c/share was declared – 22% lower than the previous year, which amounts to a total dividend of 253c/share for the year.
The group doesn’t expect a meaningful recovery over the short term despite the economy stabilising.
Management says initiatives taken to adjust to the lower volumes should benefit earnings.
At current levels the share is trading on a historical p:e multiple of 11 times and 2.4 times NAV.
Analysts say the share offers value.
Reunert displays an excellent RoE of 29.04%, good margins and solid cash flow.
It has a diversified portfolio of businesses, with strong long-term prospects for growth.
Over the short term challenging conditions are likely to place the group’s performance under pressure.
Analysts recommend the share to longer term investors, as it’s underpinned by a historic dividend yield of 4.7%.
- Finweek
Although big gun Reunert is responsible for more than of the index’s value with a R11bn market capitalisation it seems sector performance was more of a group effort, taking recovery in the share prices of Altron and Digicore into consideration.
But Reunert still remains the main player and this electronics and low-voltage electrical engineering company delivered a decent set of results for the year ended September 2009, despite difficult trading conditions.
The group reported an operating profit of R1.1bn, down 27% from the prior comparable period’s R1.6bn.
The resultant operating margin deteriorated from 14.4% to 11.1% during the year under review.
Net finance income jumped from R60.3m to R108.2m, resulting in a decline in earnings before tax of only 22%.
Taxed
The taxation expense was 30% lower at R341m, which translated into an effective tax rate of 27.5% for the year under review (2008: 30.4%).
The reduced effective tax rate led to a decline in profit after tax of only 19% to R892m.
No share of profit from associates was posted, against R16.1m in the comparative period as the investment in NSN was no longer accounted for as an associate.
Due to a change in the shareholders’ agreement Reunert now earns commission on sales of NSN products.
Future commissions have replaced dividend flows and, consequently, normalised diluted headline earnings per share dropped by 21%, from 627.9 to 495.3c/share.
Basic EPS, which includes the positive impact (R299m) of the mark-to-market of an option on NSN, rose marginally from 646.9c to 652.4c/share.
A final dividend of 188c/share was declared – 22% lower than the previous year, which amounts to a total dividend of 253c/share for the year.
The group doesn’t expect a meaningful recovery over the short term despite the economy stabilising.
Management says initiatives taken to adjust to the lower volumes should benefit earnings.
At current levels the share is trading on a historical p:e multiple of 11 times and 2.4 times NAV.
Analysts say the share offers value.
Reunert displays an excellent RoE of 29.04%, good margins and solid cash flow.
It has a diversified portfolio of businesses, with strong long-term prospects for growth.
Over the short term challenging conditions are likely to place the group’s performance under pressure.
Analysts recommend the share to longer term investors, as it’s underpinned by a historic dividend yield of 4.7%.
- Finweek
