ELB mulls sale of Australasian business
The company has suffered losses recently from its work at the Gamsberg zinc project in the Northern Cape
Capital equipment provider and engineering firm ELB Group said on Wednesday it may sell its Australasian equipment business as it grapples with cash-flow problems stemming from a loss-making contract.
ELB is also downsizing its head office and restructuring its engineering business, with the company citing a depressed trading environment and the heavy losses it incurred from its work at the Gamsberg zinc project in the Northern Cape.
The company has said previously that the plant is operational at Gamsberg, but there have been delays in final performance testing, resulting in additional work to bring the plant to contracted specifications.
In September, the company said revenue fell 40% to R2.2bn in its year to end-June, with the company reporting that this fall was largely due to a greater proportion of revenue from Gamsberg occurring in 2018. In its year to end-June 2019 its Australasian operation had contributed R622m in revenue, up 21.2% from the prior comparative period.
ELB said on Wednesday that following the restructuring it expected “to be appropriately structured for the current market environment and will consist of a market-leading African equipment distribution business offering a range of earthmoving, construction, mining and quarrying equipment from a single supplier”.
The company would also have a restructured and refocused engineering business operating within a clearly defined area of expertise, it said.
The company's share price was unchanged at R9 on Wednesday morning, having fallen 41.94% in 2019.