Reunert Full Year results in brief

Reunert has released results for its fiscal year 2023 (FY23).

Key Takeaways from the results are as follows:

1. The company experienced strong financial performance in 2023, with revenue increasing by 24% and segment operating profit increasing by 28%.
2. The profit for the year increased by 14%, driven by the strong performances of the Applied Electronics and Electrical Engineering segments.
3. The increase in interest charges was primarily due to higher interest rates and increased borrowings for acquisitions, investments, and working capital.
4. Headline earnings per share increased by 16%, while basic earnings per share increased by 11%.
5. The company was able to reduce working capital by the end of the financial year despite the increase in revenue, resulting in a net cash position of R1,171 million. The conversion of short-term banking facilities into longer-term committed facilities enhanced the company's financial capacity.

The Group's financial performance in 2023 was robust, driven by strong performances across all segments. The Group has also demonstrated prudent financial management, enhanced its financial capacity and managing its working capital effectively

The robust financial performances of both the Applied Electronics and Electrical Engineering Segments drove an impressive increase in the Group's 2023 earnings. The Group's revenue soared by 24%, reaching R13 781 million, up from R11 129 million in 2022. The Group also achieved improved operating leverage, with segment operating profit escalating by 28% to R1 462 million, up from R1 140 million in 2022.

The Electrical Engineering Segment delivered another year of solid growth, with segment revenue increasing by 14% to R7 159 million, and the segment operating profit rising by 27% to R552 million. The ICT Segment, despite facing challenges, saw an 18% increase in revenue to R3 064 million, and a 2% increase in operating profit to R660 million.

The Applied Electronics Segment had an excellent year, with segment revenue increasing by a whopping 51% to R3 559 million, and a very pleasing segment operating profit increase of 163% to R432 million.

Profit for the year also saw a significant increase, rising by 14% to R959 million, up from R844 million in 2022. This was despite an interest charge of R120 million, mainly due to higher interest rates on the Group's borrowings and increased borrowings used for acquisitions, investment into property, plant, and equipment, and working capital.

The Group's headline earnings per share grew by 16% to 602 cents per share, up from 519 cents per share in 2022. Basic earnings per share also increased by 11% to 578 cents per share, up from 520 cents per share in 2022.

Reunert demonstrated strong cash resources and liquidity. Despite a substantial increase in revenue, the Group managed to reduce working capital by the end of the 2023 financial year as global supply chains eased and commodity and electronic component prices stabilized. This reduction in working capital released R317 million, resulting in the year's net investment into working capital amounting to just R7 million, down from R334 million in 2022.

The Group has also enhanced its financial capacity, converting a significant portion of its short-term uncommitted banking facilities into longer-term committed facilities. This has ensured that the Group has adequate capital to deploy to strategic initiatives and meet operational requirements, including both replacement and expansionary capital expenditure and investment into intangible assets.