Calgro M3 reports fall in annual profit due to election uncertainty

Calgro M3 reported a drop in profit for the year ended February, blaming this on election-related uncertainty.

The group reported a 32.68% decline in revenue, dragging profit down by 15.19%.  

However, despite these challenges, the property investment and memorial park group achieved a five-year high gross profit margin of 29.43%, driven by cost efficiencies, a focus on open market sales and rigorous cost control measures.

“Though interest rates began to decline in the latter half of 2024, the full impact on the housing sector is only expected to materialise in the third or fourth quarter of 2025. These factors reflect the group’s resilience and strategic focus on margin preservation, even in a constrained economic environment,” the group said. 

The group’s headline earnings per share decreased to 171.36c, with revenue dropping to R868.9m. The group has 1,543 housing opportunities under construction, while cash reserves grew by 26.16% to R154.7m. Net debt-to-equity remained stable at 0.65 and a final dividend of 8.637c per share was declared, down from 9.493c from February last year. 

The group’s net asset value per share grew 12.07%, reaching R14.86, up from R13.26 per share from February last year.

Meanwhile, the group’s residential property development segment dominated the financial performance, with nine active projects in Gauteng and the Western Cape boosting both revenue and profitability. The range of homes spans from fully subsidised to premium properties over R3m.

“With a robust pipeline, we are contributing to addressing the housing shortage, with 36,000 residential opportunities secured at the end of the financial year. The pipeline includes the newly acquired Bankenveld District City Development, which will add in excess of 20,000 units to the group’s pipeline,” CEO Ben Pierre Malherbe said. 

The memorial parks segment continued its upward trajectory, doubling its revenue contribution to the group to 8% from 4% in the previous year, reflecting solid growth and ongoing expansion within the business.

Cash receipts grew 41.3% this year, due to sales, expanded market reach and higher customer confidence. Layby receipts jumped 57.5%, reaching R24.57m.

“Management has identified the expansion of the layby book as a strategic short-term goal with an aim of stabilising future cash flows and mitigating seasonal fluctuations in cash collections,” the group said. 

The group said it is focused on cost efficiency and cut administrative expenses by 2.71% to R95m. However, marketing costs still make up a large part of these expenses as they focus on selling available stock and boosting brand awareness.

Looking ahead, the group said it will keep rolling out its development pipeline while focusing on more innovative, cost-effective, and environmentally friendly building designs.

With the memorial parks segment expanding to six active sites, the group said it remains focused on growing its footprint while leveraging its remaining development pipeline.

majavun@businesslive.co.za