Dawn breaking out new strategy
JSE-LISTED group Distribution and Warehousing Network (Dawn) said the focus for the year ahead was to put the group on a stronger footing and turn its operations around to profitability.
The group said this on Friday after reporting losses for the year to March as a result of the deteriorating South African economy.
The group said the first part of the turnaround plan had been executed. Dawn appointed Edwin Hewitt as chief executive at the beginning of April, to take over the reins from interim chief executive Stephen Connelly.
In the new group structure, Connelly has been appointed deputy executive chairperson.
The group was not expecting a significant growth in the economy, so was prepared to navigate through these challenging times.
“As a management team, the focus is firmly on delivering on the short-term action plan and to complete the turnaround and achieve at least a breakeven position in 2018, provided there will be no further significant weakening of the economy,” said Hewitt.
Hewitt was also cognisant that the month of July was a period dominated by wage negotiations with the unions.
“The second half is also seasonally weaker. Wage negotiations have started, which could potentially lead to strike action if not successfully concluded.
“The group therefore faces a number of uncertain conditions in the short term, but management is actively addressing these, with actions including corporate restructuring activities and alternative funding options,” he added.
During the year the group also simplified its structure to better reflect its operations. It said rather than reporting on the contribution of the building, infrastructure and solutions segments to group results, Dawn now reported on the contributions of the trading and manufacturing segments.
The trading segment sells a comprehensive range of products, primarily sourced in South Africa from the group’s manufacturing segment and other manufacturers. Trading comprises WHS, Incledon and the smaller businesses of Dawn Africa Trading, Kitchen (Roco) and Hamilton’s.
The manufacturing segment manufactures mainly PVC and HDPE pipes and couplings. Manufacturing comprises DPI Plastics, Swan Plastics (51 percent), GDW (49 percent) and the smaller businesses of Ubuntu Plastics (51 percent) and DPI International.
Trading accounts for 68 percent of the group’s revenue while manufacturing accounts for 32 percent.
Dawn’s revenue declined by 13.9 percent to R4.3 billion from R5bn while its operational losses came in at R119.8 million, as compared to an operational profit of R58.1m in 2016.
The group delayed releasing the annual results due to a delay in associate company Grohe Dawn Watertech’s audited results.
Dawn’s logistic arm services its clients’ customer bases across South Africa, with cross-border deliveries to Botswana, Swaziland, Lesotho and Namibia.