Remgro HY HEPS down 39.1%

South African investment company Remgro has reported a significant decrease in headline earnings by 39.1%, reflecting the impact of global macroeconomic and geopolitical challenges on its portfolio companies. Despite these challenges, Remgro has decided to maintain its interim dividend at 80 cents per share. Jannie Durand, the CEO of Remgro, highlighted the tough operating environment the company has faced over the past 12 to 18 months, citing consumer over-indebtedness and high interest rates as key factors. The decline in headline earnings was largely attributed to one-off items like the restructuring of the portfolio, indicating a 11.7% decline in underlying performance. Durand expressed confidence in Remgro's balance sheet strength, which allowed the company to maintain its dividend. He mentioned that while the pressure from inflation has impacted the cost levels, the company is focused on managing costs effectively across its operations. Remgro's net asset valuation decreased by 4.6%, setting a new base for future growth. Durand emphasized the importance of managing the underlying performance of portfolio companies to drive earnings growth. The company's investment in Heineken's returnable bottle project is expected to enhance operating performance, while efforts in Medclinic focus on addressing nursing shortages and energy efficiency. Looking ahead, Durand expects a tough operating environment in South Africa for the next 12 to 18 months, with hopes of relief post-elections through potential interest rate cuts. Remgro's focus on transactions and acquisitions includes awaiting approval for Vodacom's investment in CIVH, a fibre company, to unlock growth opportunities and expand internet access in underserved areas. The company sees significant potential in this sector, pending positive signals from the competition tribunal. Overall, Remgro remains resilient in navigating challenges and driving sustainable growth amidst a challenging economic landscape.