Remgro FY HEPS up 8.9%

Remgro, an investment group founded in 1940, has recently announced an increase in headline earnings per share by 8.9 percent. Despite operating in what the CEO Jannie Durand described as one of the most difficult business environments in the company's history, Remgro managed to show resilience and deliver strong results. Durand highlighted the challenges they faced, including high inflation, high input costs, load shedding, and crumbling infrastructure in South Africa. The tough consumer market, particularly in the chicken industry, added to the pressure. However, the company also saw positive performances from investee companies like Outsurance, Mediclinic, and FirstRand. These companies, along with offshore earnings, helped offset some of the local challenges. Durand acknowledged that while there were some external factors impacting their numbers, the underlying performance still showed a 27 percent increase. He emphasized the importance of acknowledging the noise in their financials, attributing it to transactions like the Mediclinic and Heineken deals. Despite the challenges, Remgro remains cautiously optimistic about the future, with Durand mentioning that the next 12 months are expected to be tough. In a positive development for the country, Durand expressed excitement about the continuation of AGOA (African Growth and Opportunity Act) as planned, highlighting the significance of the US as one of South Africa's biggest trading partners. This news comes amidst concerns about potential strained relations between South Africa and the US over Russia. Durand stressed the importance of maintaining neutrality in international relations to avoid hurting the country's interests. Shifting the focus to Remgro's efforts in the security space, Durand shared insights into their collaboration with other stakeholders, including Sabania Gold's CEO Neil Frondman. As part of their work on security, they are coordinating private sector initiatives to enhance information gathering, surveillance, and collaboration with law enforcement agencies. The goal is to combat crime and corruption more effectively by leveraging private sector resources and expertise. Addressing the issue of the discount at which Remgro shares trade on the market, Durand acknowledged the concern but clarified that their recent transactions were driven by the best interests of the companies involved rather than solely to narrow the discount. He highlighted deals like the Heineken-Destel merger and the privatization of MSC as beneficial moves for the companies. Remgro's share buyback program aims to invest in undervalued assets like Outsurance and Mediclinic at a significant discount, creating value for shareholders. Looking ahead, Remgro plans to navigate the challenging environment by focusing on returning capital to shareholders, with a dividend payout, unbundling initiatives, and share buybacks representing a 4.2 percent return to shareholders. By prioritizing prudent financial management and strategic investments, Remgro aims to drive value creation for its stakeholders amidst the turbulent economic landscape.