Sephaku’s earnings set to drop on low cement sales and flat prices
Building and construction materials group Sephaku Holdings (SepHold) expects a decline in earnings in the first half of the financial year as low sales and flat prices hurt subsidiary and concrete supplier Métier Mixed Concrete’s net profit.
The company, which has core investments of 36% interest in Dangote Cement SA and 100% in Métier, said it expected an interim headline loss per share of 3.36c-4.37c to end-September, compared with the prior period’s headline earnings per share of 12.59c.
The continued decline in concrete sales volumes and flat pricing against inflationary cost increases resulted in a decrease in Métier’s net profit, the company said. Métier manufactures ready-mix concrete products for SA’s industrial, commercial and residential markets.
That subsidiary is implementing a strategy to geographically diversify plant footprint to maintain optimal sales volumes and cost management initiatives to support profitability, SepHold said in a statement.
The group has taken strain from the declining demand and price competition in cement and mixed concrete markets, according to its 2019 annual report.
The demand for building materials has fallen as the SA economy struggles against the backdrop of loss-making state-owned entities, among others.
SepCem, SepHold’s joint venture with Dangote Cement, will report a 19% decline in cement volumes to end-June. However, the company said there was a steady recovery in sales volumes after September, which has improved its profitability.
SepHold was, however, upbeat about the prospects in the next 12 months. “The group remains cautiously optimistic about the next six to 12 months after the commencement of several civil construction projects for the national road network rehabilitation and water storage infrastructure,” it said.
Lelau Mohuba, the group’s CEO who has been at the helm since 2012, is to retire at the end of December. Mohuba was chair from 2005-2012.
SepHold’s share price was unchanged at R1.30 on Friday, having fallen 27.78% year to date.