Sephaku’s profit rises to R57.8m for the financial year

SEPHAKU Holdings’ associate company Dangote Cement South Africa (Cement) reported a R90 million improvement in second-half profit to R73.9m compared with a firsthalf loss of R16.1m.

The company said yesterday that the result took its annual profit for R57.8m.

Sephaku has a 36 percent stake in Cement and a 100 percent interest in Métier Mixed Concrete, the supplier of quality ready-mixed concrete products and concrete pumping services.

Dangote Cement, Africa’s largest cement producer, owns 64 percent of Cement.

In the 12 months to the end of December last year, Cement increased revenue by 3.7 percent.

In February 2018, Dangote Cement South Africa implemented a 5 percent price increase across all its markets for the bagged cement.

Cement’s earnings before interest, tax, depreciation and amortisation margin – which measures a company’s operating profitability as a percentage of its total revenue – was 21.3 percent. Net profit was R57.8m, down from the previous R68.9m in 2016.

In the update, Sephaku alluded to the subdued South African economy last year. It said estimated industry sales volumes, including imports for 2017, were 12.9 million tons, representing a decline of 0.8 percent from the 13 million tons in the previous year.

Although Cement’s performance in the first half of last year was weak, resulting in the R16.1m loss, the company reversed its fortunes in the second half of the year. It attributed the improvement to increased demand and better operational efficiencies.

“The enhanced business sentiment due to perceived political stability is broadly expected to increase investment into all major industries. Nonetheless, the economy is likely to remain under pressure for the next 12 to 18 months, as the anticipated pro-business monetary and fiscal policies are implemented.

“The South African Reserve Bank increased its (gross domestic product) growth forecast from 1.2 percent to 1.4 percent and the World Bank published a forecast of 1.1 percent for 2018. These forecasts have provided an improved macro-economic landscape for the cyclical building materials industry,” Sephaku said.

Sephaku’ declined 5.54 percent on the JSE yesterday to close at R2.56.

R16.1m The size of Dangote Cement’s loss in the first half of last year.