Strike by engineering workers under Numsa hit Reunert's interim financial reporting

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  • Reunert has a portfolio of businesses in electrical engineering, ICT, and applied electronics.
  • The wage strike in 2021 by engineering workers impacted the company's earnings.
  • The three-week strike ended in October with the signing of a 6% wage agreement.

A three-week wage strike by engineering workers last year impacted Reunert's interim operating profit, as the segment only managed a paltry 1% increase to R449 million in the six months to the end of March.

The industry-wide strike by workers in the engineering and metals sector affiliated with the National Union of Metal Workers of South Africa (Numsa) ended in October 2021 after the signing of a three-year wage agreement, with a 6% wage increase.

On Wednesday, Reunert - which has a portfolio of businesses in electrical engineering, ICT and applied electronics - said the strike led to a reduction in its electrical engineering segment's operating performance.

Segmental operating profit increased by 1% to R449 million from R445 million in the six-month period ended 31 March 2021.

"The strike negatively impacted the throughput of the South African manufacturing businesses with the power cable factory unable to recover approximately 10% of the volume when compared to the prior year," the company said.

Group revenue accelerated by 11% from R4.6 billion in the comparative period to R5.1 billion.

The growth in revenue was attributed to the pass-through of high metal prices to customers in terms of pricing formula in the electrical engineering segment and the growth in export sales in the applied electronics segment as the granting of export permits resumed.

The ICT business posted an operating profit in line with expectations, with segment operating profit increasing by 4% to R305 million.

The company reported that its renewable energy businesses was making good progress, with considerable effort going into the enhancement of systems, processes, and the product range at the battery storage business.

"The solar photovoltaic business continues to grow from strength to strength and to capitalise on a buoyant renewable market."

The group's loss-making telecommunication cable joint venture business, CBI-Electric Telecom Cables, which was placed under business rescue in early March following several restructuring initiatives continued to underperform.

"In the current year, the expectation was for a recovery based on indicated order off-take from a major customer. In anticipation of these orders, substantial quantities of raw fibre were imported. Unfortunately, the customer delayed its orders leading to the business suffering cash flow difficulties," the company said.

Reunert also highlighted the challenging environment of continued underspend by South African state institutions on electrical infrastructure, increased logistic costs, extended supply chains, and global electronic component shortages. 

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