Remgro delivers robust annual earnings

South African investment holding company Remgro has managed to navigate the challenges presented by the global and local investment environments, delivering financial metrics that have surpassed pre-pandemic levels. The company's Headline earnings per share have surged by over 100%, and they have declared a final gross dividend of 100 cents per share. In a recent interview with CNBC Africa, Neville Williams, the CFO of Remgro, shed light on the performance of the company's investing companies and its plans for the future. The financial results highlight a strong recovery in the investment portfolio, with the majority of companies bouncing back to pre-pandemic levels. The stellar performance was primarily driven by the revival of the medical sector and total energies. Grand Road and fiber business CIVH also contributed to the improved performance, with CIVH transitioning from a loss to profitability during the current financial year. However, Williams pointed out that companies like CICALO in the consumer business struggled due to a significant increase in commodity prices, particularly palm oil, a key input cost in their manufacturing processes. The disruptions in the supply chain caused by challenges in Ukraine further added to their woes. Looking ahead, Remgro is focused on optimizing its portfolio composition over the next two to three years. The company has recently announced transformative transactions such as the medical and Nick transaction and the steel Heineken transaction. These strategic moves will see Remgro pivoting towards a majority unlisted portfolio, enhancing its scarcity factor in the market. Williams clarified that despite the unbundling activities, Remgro will remain listed, offering investment opportunities to shareholders. While acknowledging the challenges in the current operating environment, including low trading and rising interest rates, Williams expressed optimism about the future prospects of the investment portfolio. The businesses under Remgro have demonstrated resilience with a focus on cost efficiency and balance sheet strength. As for geographic expansion, the company aims to support its investing companies in expanding into the rest of Africa. In response to the ongoing energy crisis in the country, Remgro has been investing in renewable energy through its subsidiary Energy Extrines. This strategic move is aimed at mitigating the risks associated with power disruptions from the national power utility, Eskom. The renewable energy investments have already proven beneficial for some of Remgro's companies, offering a reliable backup during low trading periods. Looking ahead, Remgro will continue to focus on optimizing its portfolio, with growth opportunities identified in sectors such as CIVH's fiber-to-the-home business and the growth prospects of mediclinic and RMI's out-surance investment.