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- Remgro, the investment holding firm chaired by Johann Rupert, says it's seeing the worst conditions since 2000.
- Load shedding, high interest rates, geopolitical tension, as well as crime and corruption are all coinciding with an erosion of business confidence in SA, it says.
- But despite this, higher contributions from investees like Mediclinic have helped it increase its dividend by 60%.
- For more financial news, go to the News24 Business front page.
Remgro, the diversified investment holding company whose stakes include energy, food producers and industrial companies, says businesses are operating in the most difficult trading environment since its reconfiguration 23 years ago.
Releasing its results for the year to end-June on Thursday, Remgro said this challenging business environment is brought about by the confluence of global factors of high interest rates and inflation, foreign exchange volatility, geopolitical tensions as well as the lack of electricity. Adding to the mix is concerning crime levels and corruption as well as the erosion of foreign investment confidence in SA.
"With low levels of expected economic growth – combined with the breakdown in state infrastructure relating to energy, transport and logistics, and the slow pace of economic reforms to date – the urgency to address these issues cannot be overstated."
Initially listed on the JSE in 1956 as the Rembrandt Group, Remgro was founded in 1948 by Anton Rupert as tobacco company Voorbrand, and has seen many business cycles since then. Jannie Durand is CEO and Johann Rupert is the current chairperson.
READ | Failing municipal infrastructure, load shedding and commodity prices hit Rainbow-owner RCL
Through all the current headwinds South Africa has to navigate, Remgro said it remains confident about the resilience of its portfolio to maintain positive earnings growth momentum. The holdings include stakes in British American Tobacco, alcoholic beverages producer Distell, hospitals group Mediclinic, food producer RCL, a stake in the SA operations of fuel producer Total Energies, health and financial services companies Discovery and FirstRand, among others.
In the period under review, Remgro grew its headline earnings by 8.7% to R7 billion amid higher contributions from OUTsurance, Mediclinic, and FirstRand, as well as higher interest income and foreign exchange gains.
The group's ordinary dividend of R2.40 is a 60% jump from last year's payout, while intrinsic net asset value rose 16.6% to about R248.50, with the discount at which its shares trade rising 1.8 percentage points to 40.8%.
The group had a pretax intrinsic net asset value of about R143 billion at the end of June, with Mediclinic being the largest and making up almost a third. The contribution to headline earnings from Mediclinic had risen by more than a third as well to almost R1.7 billion.
During the year, Remgro concluded a R40 billion merger between its wine and spirits maker Distell with global beer maker Heineken. In August 2022, Remgro acquired the shares it did not already own in Mediclinic, in a consortium with Switzerland’s MSC Mediterranean Shipping. The transaction valued Mediclinic at R75 billion.
Shares in Remgro, which is valued at over R82 billion on the JSE, were down marginally on Thursday morning but have gained more than 16% over the past one year.
* This article and headline has been corrected to indicate that Remgro's current environment is the most difficult since the group’s inception in its current incarnation in 2000, not its original inception in 1948.
