Remgro ups dividend, despite disappointing earnings

Corporate actions in the recent past were a significant driver of earnings decline.

Stellenbosch-headquartered investment holding firm Remgro announced on Sens on Thursday morning that its earnings dropped by 20% for the year ended 30 June 2024.

Read the Sens announcement here.

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The group, which is a noteworthy shareholder in companies including Discovery, FirstRand, OUTsurance, and RCL Foods, declared an ordinary dividend of 264 cents per share — up 10% from the prior year.

Remgro share price 

Headline earnings per share (Heps) was down by 18.8% to 1 018 cents compared to 1 254 cents in the corresponding period in 2023.

According to the group, a significant driver of the decline in headline earnings relates to the effect of the corporate actions implemented in the recent past. The 120 basis points difference in the Heps results from the “accretive impact of shares repurchased during the 2023 financial year and the beginning of the year under review”.

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The majority are non-recurring items. The difficult operating environment, particularly in relation to the trading results of Heineken Beverages Holdings Limited (Heineken Beverages), also contributed to the material decline in headline earnings.

“While the group’s results for the year under review did not meet expectations, Remgro’s focus remains on disciplined capital allocation and actively partnering with management teams to drive sustainable performance at its underlying investee companies to deliver long-term value for its shareholders,” it says.

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Remgro’s intrinsic net asset value per share increased by 1.0% from R248.47 at 30 June 2023 to R251.01 at 30 June 2024.

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The group says the 2024 financial year was a challenging period with the continued focus on concluding and integrating a series of transformative corporate actions that still impact its results.

“While strong contributions were made by some of Remgro’s investee companies, considerable work still needs to be done to bed down the operational performance of a number of its key investments.

“Last year, Remgro listed some of the challenges faced by South African businesses, notably the continuation of high interest rates, the disruption of business operations due to load shedding, local infrastructure and logistics-related challenges due to geopolitical instability, and exchange rate volatility. Although some of these challenges persisted, there were some encouraging macroeconomic improvements, including an improvement in inflation, a substantial reduction in load shedding, and – more recently – a decrease in fuel prices.

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“The difficult business environment was compounded by the political uncertainty leading up to the national elections in May. Since then, and the subsequent establishment of the Government of National Unity (GNU), investor sentiment towards South Africa has improved, and we too believe there is reason to be hopeful about improved economic prospects,” it notes.

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