Sephaku will pass on carbon tax to customers as profits stall
JSE-listed Sephaku Holdings (SepHold), which owns mixed concrete maker Métier and has a large stake in Dangote Cement’s business in SA, says it will pass on the cost of SA’s new carbon tax to customers in the form of higher prices.
The government started applying the carbon tax, based on emissions, on June 1 2019. Cement makers produce carbon emissions when they use coal to burn limestone and other raw materials.
Sephaku Cement, 64% owned by Nigeria-listed Dangote, estimates it will pay carbon taxes of R35m-R40m a year, SepHold said on Wednesday.
Sephaku Cement will raise prices in July by between 4% and 6% “in line with the implementation of the carbon tax and standard biannual increases”.
SepHold said on Wednesday revenue in the year to end-March edged up slightly to R835.8m, while profit after tax was flat at R44m. The group did not declare a dividend.
SepHold CEO Lelau Mohuba said the group had focused on cutting debt amid tough trading conditions in SA.
“We expect the building materials demand to remain constrained due to the short-term challenges in stimulating the economy against the backdrop of high sovereign debt and loss-making state-owned entities,” Mohuba said.
“Our outlook for the next 12 to 24 months remains negative, anticipating anaemic growth unless the newly elected government urgently provides requisite impetus through pro-infrastructure investment policies.”
SepHold said it is reducing head-office costs by not replacing three directors who had left and by reducing executive management remuneration.
The executive management team would not increase their remuneration for financial year 2020, it said.
In 2014 PPC’s then-CEO Ketso Gordhan took a R1m pay cut and his top 60 managers’ remuneration was frozen in order to hike the wages of the cement manufacturer’s 1‚200 lowest earners.