Marc Hasenfuss Investors Monthly editor, writer & columnist

At the end of June, the cash pile of industrial services business Howden Africa had breached the R1.3bn mark. That’s equivalent to more than R20 a share — startling for a company with a market cap of less than R2.5bn. The firm has mostly trundled along nicely since the most recent dividend was paid — in the second half of 2013 — which has frustrated shareholders accustomed to a generous payout policy. The just-released interim results, however, show that Howden is feeling considerable strain in its main markets. The core division for fans and heat exchanges reported a 37% plunge in operating profits to R84m and the environmental control division slid R3.3m into the red. Overall revenue was down 23% and operating profit plunged 40%. The large cash holding — which generated more than R40m in interest — provided a cushion, limiting the fall in bottom line to just 25%. Cash generated from operations declined to R151m from R236m in the corresponding period. Under the circumstances, I sus...

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