Reunert, the JSE-listed owner of Reutech defence industries, warns it will be posting lower earnings later this month.
In a Stock Exchange News Service announcement, the company says that, assuming stable economic conditions and given no surprises, the group’s second half performance should be better than that of the first half. But basic earnings per share and headline earnings per share will be between 20% and 25% lower than the earnings achieved in the previous financial year. (In 2009 basic earnings and headline earnings were 652.4 and 651.6 cents per share respectively.)
It explains the basic earnings per share and headline earnings per share for the 2010 financial year will decrease due to the non-recurrence of the non-cash mark to market abnormal profit of R299.2 million in the 2009 financial year. This mark to market profit arose out of the put option that Reunert holds in respect of its investment in Nokia Siemens Networks.
Reunert further says it will be announcing its results for the year ended September 30 on or about 17 November and will report normalised headline earnings per share between 1% and 5% higher than the previous financial year.
The results will be new CE Nick Wentzel’s first. He succeeded Gerrit “Boel” Pretorius at the beginning of August. Pretorius was appointed to the Reunert board in 1990 and has been CE of the company since 1997. Wentzel, 54, has a BCom from the now University of Johannesburg and qualified as a chartered accountant in 1977. His management experience includes working in the corporate finance division of Hill Samuel Merchant Bank, being a GM in the industrial division of General Mining, and serving as divisional chairman of Tiger Foods.
Wentzel managed the unbundling of Astral Foods and became the first CE of that company following its unbundling. Since 2009, he has been CE of Parmalat SA, which includes responsibility for Africa. Munday says the company decided to find a new CE well in advance of Pretorius’ retirement, as the company was aware that it would take some time to replace him.
In May Reutech reported revenue was up 37% to R386 million for the first six months of the company’s just-completed financial year. But the strong Rand reduced operating profit by 58% to R21 million mainly because of a mark-to-market loss of R6 million in respect of foreign currency holdings (versus a gain of R28 million in the comparable period), the group said at the time.
In its annual report released in December last year, Reunert said the prospects for Reutech, were good, “although results may not be as strong as 2009.” The report added Reutech “had a bumper year” for the period to September 30 with revenue growing by 40% to R874 million and operating profit increasing by 55%. “The anticipated award of certain key long-term local orders will, over the next three to five years, lead to a more balanced distribution between its local and export business. All exports were repeat business and in many instances, we have supplied the same product to the same customer for more than five years; which is a good situation,” the report added.
In its May results, Reunert declared an interim cash dividend of 67 cents per share, up 3% on last year. The balance sheet for the whole group was said to be strong with available cash of R1.4 billion. A higher tax rate reduced the growth in normalised headline earnings to 3% (238,9 cents per share).