Argent set back by vehicle unit, strikes

ARGENT Industrial, a holding company of various local manufacturers, on Friday reported it had an after-tax loss of R193m for the year ended March, from the previous year’s profit of R76m.

The results included R215m in impairments, mostly blamed on its “underperforming automotive division”. That this was more of an accounting than actual loss was demonstrated by Argent declaring a final dividend of 7c which, with its interim dividend of 7c, took its total dividend for the year to 14c — a 17% increase on the previous year’s 12c.

The impairments saw Argent’s net asset value per share fall 15.74% to R12.42, which is more than double its share price of about R5.50.

Friday’s results statement showed that the company’s vehicle parts division was written down by R155m with an additional impairment of R32.5m for the division’s factory in Ga-Rankuwa.

The results statement said this was necessary due to how badly the automotive division had suffered from weak consumer demand along with growing competition — especially from imports.

Its investment in the “highly competitive and overtraded paint and aluminium division” was impaired by R49m, and its steel trading and steel retail division contributed a further R20.5m in write-offs. Had these abnormal write-downs not occurred, its normalised earnings before tax would have been R82m instead of the reported loss of R210.4m.

Argent estimated strikes at various customers, including the protracted platinum industry strike, cost the group R15.9m during the reporting period.

“As a result of the continuous country-wide strikes, the group has committed itself to an automation programme that will reduce the number of staff from the existing 2,774 to 2,400 by the end of next year. The cost of the retrenchments will be absorbed in the 2015 financial year and the benefit felt from the 2016 financial year onwards.”

Argent said it was in the process of selling 12 of its 22 properties, considered to be noncore, expecting to raise R278m this financial year.

The proceeds will be used to repay bank bonds of R84.2m, buy back shares and invest in its branded manufacturing businesses, which it sees as its most promising niche in the future.