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Key Points
- Remgro increased its dividend by 10% to 264 cents per share despite a 20% drop in earnings for FY2024.
- Johann Rupert emphasized disciplined capital allocation and long-term value creation, despite challenges from corporate actions and underperforming investments.
- Remgro’s intrinsic net asset value per share rose by 1%, with optimism fueled by improved investor sentiment and recent macroeconomic improvements in South Africa.
Remgro, the Stellenbosch-based investment holding company, has declared an ordinary dividend of 264 cents per share, reflecting a 10-percent increase compared to the previous year.
This announcement comes despite a 20-percent drop in the company's earnings for the financial year ending June 30, 2024, highlighting the impact of corporate actions and challenging market conditions. Remgro's headline earnings per share (Heps) fell by 18.8% to 1,018 cents, down from 1,254 cents in the same period last year. The decline was mainly attributed to non-recurring items, including corporate actions such as share buybacks and the challenging performance of some of its portfolio companies, particularly Heineken Beverages Holdings Limited. Johann Rupert’s strategy amid earnings decline South Africa’s richest man, Johann Rupert, the executive chairman of Remgro, emphasized the company’s focus on disciplined capital allocation and strong partnerships with management teams. Remgro continues to prioritize long-term value creation for shareholders through sustainable performance at its underlying investments. Despite a tough year, the company’s intrinsic net asset value per share saw a slight increase of one percent, reaching R251.01 as of 30 June 2024. While the decline in Heps was significant, Remgro’s management noted that some of its investee companies performed well during the period. However, they also acknowledged the challenges posed by South Africa's difficult operating environment, including high interest rates, infrastructure issues, and geopolitical uncertainties. Nonetheless, Rupert remains optimistic about the potential for economic recovery and the prospects for Remgro's long-term growth. Positive outlook despite market challenges
Despite the broader market challenges, including exchange rate volatility and the impact of load shedding, Remgro’s board remains committed to navigating these complexities. Johann Rupert highlighted that investor sentiment has improved since the establishment of South Africa's Government of National Unity following the national elections in May. This political stability, coupled with recent reductions in inflation and fuel prices, has bolstered optimism within the company about the country's economic outlook. Although some key investments within Remgro's portfolio still require operational improvements, Rupert believes that the groundwork laid through corporate actions in recent years will position the company for future success. The boost in dividend payout reflects Remgro’s confidence in its ability to deliver value to shareholders, despite a challenging fiscal year.
