Reunert’s Pivot to Super Cycles: Defense JV and Internationalization Take Center Stage
A disappointing first half masks strategic moves that could redefine the group’s growth trajectory.
RLO.JO · Earnings Call · 2026-05-25
A Mixed First Half
Reunert’s first half of 2026 was, in the words of incoming CEO Anthonie de Beer, “disappointing, and I share that plainly.” — Anthonie de Beer, CFO · 2026-05-25 Group revenue inched up 1%, but operating profit fell 23% and HEPS dropped 22%. The pressure came from the power cable business, where double-digit volume declines in South Africa and Zambia, coupled with record copper prices, drove a 40% decline in segment profitability. The ICT segment was roughly flat, while Applied Electronics delivered strong momentum, with defense revenue up 41% and operating profit up 41%. Yet beneath the headline numbers, there is a clear strategic narrative taking shape. De Beer and CFO Mark Kathan repeatedly stressed that the balance sheet remains strong, net cash positive, and that the group is positioning itself to participate in what they call super cycles — energy transition, AI and digitalization, and defense. The first half saw progress on internationalization, including a 9% increase in international revenue and a 10% CAGR since 2021. Notably, circuit breaker exports to the U.S. grew 6% despite tariffs, and the company successfully passed on roughly 75% of those tariff costs.Defense and the European JV
The most significant announcement was the formation of Fuchs Electronics Europe, a joint venture with CSG, a fast-growing European defense business. The JV will establish an in-market manufacturing presence in Slovakia, with Reunert retaining majority control and its intellectual property. As De Beer explained, “This partnership gives us proximity to the market, a credible European platform and a way to scale Fuchs’ technology into this growing demand cycle.” — Anthonie de Beer, CFO · 2026-05-25 The deal is capital-efficient, supported by a binding launch order covering the first three years, and expected to be self-sufficient within three years. This move directly addresses the defense cluster’s need for scale and market access. The domestic defense order book stands at ZAR 2.4 billion, but the real growth lies in exports and the shift toward electronic fuses. The JV is deliberately OEM-agnostic and will serve multiple ammunition manufacturers and defense ministries, positioning Reunert to capture demand from the broader European defense spending wave.Super Cycles and Strategy Refresh
De Beer framed the longer-term investment lens around three structural growth cycles. He warned,The group is refreshing its strategy to sharpen ambition, focus, and pace, with a Capital Markets Day scheduled for September to detail the Applied Electronics segment’s potential. Meanwhile, the Electrical Engineering segment continues to deal with near-term headwinds. The framework agreements with Eskom for transmission grid expansion are in place, and orders have started flowing, though the ramp-up to full capacity is expected to take about 18 months. The Zambian business, Zamefa, has renegotiated fixed-price contracts to pass through higher copper costs, and delayed orders are expected to recover in the second half.When you operate in super cycles, they don’t wait for you. The super cycles will happen, they will take place. Capital will flow into super cycles, resources will flow into super cycles and a significant amount of financial wealth will be generated in the process.