Dawn break­ing out new strat­egy

The Star Early Edition - - COMPANIES - Sandile Mchunu

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.

PHOTO: SUP­PLIED

Dawn’s lo­gis­tic arm ser­vices its clients’ cus­tomer bases across South Africa, with cross-bor­der de­liv­er­ies to Botswana, Swazi­land, Le­sotho and Namibia.

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