Reunert reports little activity from South Africa's claimed infrastructure investment

South Africa’s government keeps talking about a massive infrastructure overhaul, but a key supplier to Eskom is saying… nothing’s happening. Jislaaik. While politicians are promising a befok future of roads, railways, and reliable electricity, the reality on the ground – at least according to Reunert – is looking distinctly kak. This isn’t just about Eskom’s cables, bru. It’s about the future of the whole shebang. ## So, What’s Reunert Got To Do With It? Reunert isn’t some fly-by-night operation. They're a JSE-listed engineering and applied electronics group, and a *major* supplier of cables to Eskom. Think of them as a canary in the coal mine – if they’re feeling the pinch, it’s a pretty solid indicator that the promised infrastructure spend is still stuck in PowerPoint presentations and ministerial briefings. They’ve got their fingers in a lot of pies, from power cables to defence systems, which makes their insights particularly valuable. Essentially, if anyone should be benefiting from a big infrastructure push, it’s these guys. And right now? They're not. ## 14% of GDP? That's… Kak? Let’s get straight to the point. South Africa’s Gross Domestic Fixed Investment (GDFI) has taken a serious beating, plummeting to its lowest level in 25 years. We’re talking a dismal 14% of gross domestic product. Fourteen percent! That’s the kind of number that makes even a seasoned economist reach for the dop. What does this actually *mean*? It means businesses aren’t investing in expanding or upgrading their operations. It means fewer construction projects, fewer jobs, and a slower-growing economy. The directors at Reunert put it bluntly: “This is evident in…the South African gross domestic fixed investment…falling to its lowest level in 25 years…as the South African government’s stated commitment to infrastructure investment did not translate into tangible activity in the period.” It’s a fancy way of saying the government is all talk and no action. You’d get more action trying to order a takeaway on the Durban beachfront during peak season. ## The Numbers Don't Lie: Reunert's Pain is Real Reunert’s latest results paint a pretty clear picture. Group revenue nudged up 1% to R6.31 billion, which sounds okay on the surface. But don’t be fooled. Operating profit *fell* a significant 23% to R453 million. That’s a huge drop. Group headline earnings per share also took a knock, falling 22% to 185 cents. They managed to maintain their interim cash dividend at 90 cents per share, which is good for shareholders, but it doesn’t mask the underlying problems. The key takeaway? Despite a slight increase in sales, Reunert is making less money. And a big part of the reason is the lack of infrastructure work. ## Beyond Load Shedding: What's Befok in the Electrical Engineering Segment? The Electrical Engineering Segment, where the power cable businesses reside, is where the real pain is being felt. Revenue increased by 2% to R3.5 billion, but segment operating profit *decreased* by a whopping 40% to R138 million. Orders are being delayed, “mainly around the recapitalisation of the transmission grid and low volumes from local municipalities.” Imagine waiting for a Nando’s order that never arrives – that’s what it's like for Reunert waiting for infrastructure projects to get off the ground. High voltage cable volumes are stagnant, and medium and low voltage cable volumes are down 14% and 20% respectively. To add insult to injury, commodity prices have hit record highs, increasing their working capital investment in power cables by R126 million. Eish. ## Defence Cluster to the Rescue? (And What About ICT?) It's not all doom and gloom, thankfully. Reunert's diversified portfolio is providing some buffer. The Defence Cluster is performing surprisingly well, delivering "excellent" results thanks to strong circuit breaker export volumes and a healthy order book. The Applied Electronics segment also saw a strong improvement, with segment operating profit increasing by 41% to R110 million. The ICT Segment was stable, with operating profit increasing by 1% to R321 million. These segments are helping to offset the losses in Electrical Engineering, but they can't carry the whole company forever. It's like trying to run a Checkers rewards card with only a few points loaded - you can get some basics, but you're not going on a shopping spree. ## Geopolitics & The Rand: It's Not Just Local Kak The situation isn't helped by global events. Geopolitical developments in the Middle East are causing havoc with foreign exchange rates, energy prices, and supply chains. Reunert’s directors acknowledge that the full impacts of these developments “are still unfolding.” The Rand’s performance isn’t making things easier either, impacting the Defence Cluster’s foreign-denominated export revenues. It's a perfect storm of local incompetence and global instability. ## Is Anyone Actually Building Anything in SA? The big question, bru, is this: are we actually building anything in South Africa? Or are we just endlessly talking about building things? The lack of infrastructure investment isn't just a problem for Reunert; it's a problem for the entire country. It stifles economic growth, discourages foreign investment, and perpetuates the cycle of poverty and inequality. A 14% GDFI is not a recipe for a thriving economy. It’s a recipe for stagnation. **Verdict:** The numbers are clear. Despite government promises, infrastructure investment in South Africa is woefully inadequate. Reunert’s results are a stark warning sign that we’re falling behind. This isn't just a business issue; it’s a national crisis. We need to see tangible action, and we need to see it now. **Now, speaking of crises… is the South African property market about to face a major correction? Click here to find out.**