Connelly offers hope for Dawn’s venture

HOPEFULLY, the darkest hour has passed Distribution and Warehousing Network (Dawn), the infrastructure-aligned conglomerate.

Yesterday’s trading update covering the year to end-March would certainly have dimmed the hopes that shareholders held after the interim numbers showed some signs that operating margins were being rebuilt.

A particularly worrying problem area is the Grohe Dawn Watertech (GDW) venture, in which the company holds a minority (49%) stake. If there is any glimmer of hope in this operational mess, then it is the seconding of recently appointed director and interim CEO Stephen Connelly — formerly the CEO of Hudaco — to GDW.

Mr Connelly’s role will be fascinating to gauge in the next few months as Dawn look for a permanent CEO to replace the longserving Derek Tod, who retired recently. More than a few shareholders might hope the search for a new CEO is a prolonged affair, allowing Mr Connelly — who earned huge market respect during his long tenure with Hudaco — to bring some much needed focus to Dawn’s sprawling operations.

Interestingly, Dawn has formed a subcommittee to really get to grips with the turnaround, and a key task will be to review underperforming and noncore businesses’ carry values “where a likely risk of impairment has been identified”. Expect action … sooner rather than later.

TRADE Union Solidarity says SA has faced a “retrenchment bloodbath” in the past calendar year, hitting about 60,000 jobs both in the private and public sectors, and especially in mining.

Among companies that have let employees go are Anglo American Platinum, Harmony Gold, Lonmin, Exarro, Kumba, Samancor and Aveng Moolmans.

But the ravages of the global economy have undoubtedly been made worse by SA’s own goals.

Along with the global commodities bust and cheap Chinese steel exports, Eskom’s inability to produce enough electricity and a relentless series of strikes — especially in the mining industry — have hobbled the country.

The government has hounded both the mining and steel industries over transformation and “developmental” pricing, also locking big construction companies out of state infrastructure plans.

But all such parties share the blame for slow economic growth.

The government for its lack of policy cohesion, and for wielding a big stick over empowerment without providing any carrots — or even a nod to global markets.

Big business for failing to come up with broad, competitive and productive transformation, while retaining a penchant for cozy cartels and monopoly pricing.