Sephaku reports H1 profit

06 November 2015

Sephaku Holdings on Thursday reported a net profit of R18.5-million for the six months ended September 30, compared with a loss of R3.74-million in the six months to September 2014.

The group also reported revenue of R461.4-million for the period under review, compared with revenue of R404.2-million in the prior comparative period.

This was attributed to increased output from ready-mixed concrete products subsidiary Metier’s eleventh plant, which started production in September 2014.

However, the subsidiary recorded an earnings before interest and taxes (Ebit) margin of 13%, or R59.8-million, which was slightly lower than the 15% recorded in the prior comparative period, mainly owing to increased price competition, as well as Metier management’s decision to cease supply into a significant government contract for a period of six weeks because of inconsistent payment.

SepHold said its Sephaku Cement (SepCem) subsidiary had reached steady-state capacity use for both its plants in May. SepHold expected a strong year ahead, with Metier entering the 2016 financial year with a robust order book, having secured four anchor supply contracts ranging from 50 000 m3 to 75 000 m3.

During the interim period, SepCem also adopted a defensive coastal strategy against imports in areas where it had a natural competitive advantage, resulting in about 20% of its volumes being sold into the KwaZulu-Natal market.

The province was its second-largest market after Gauteng at almost 2.1-million tonnes a year.

ITAC’s imposed tariffs had significantly reduced imported cement volumes, resulting in higher demand for locally produced cement.

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