Sephaku profits from second-half recovery
Sephaku Holdings, a JSElisted cement maker that holds a 36% stake in Dangote Cement and 100% of Métier Mixed Concrete, has reported a second-half profit of R74m after a first-half loss of R16m.
This has given it an annual profit of R58m for the 12 months ended December 2017.
The empowerment group, backed by Nigerian interests, has become a cat among the pigeons in South African cement industry circles after investing in a big clinker plant in the North West and a cement-milling plant in Mpumalanga, as well as facilities for fly ash, an ingredient of cement that uses Eskom waste.
But a clear understanding of the level of competition that this has brought to SA’s cement markets has been undermined by the country’s competition authorities.
They long ago banned the production of real-time cement industry data and won’t allow this to be disaggregated. This is because they fear market knowledge around cement output will allow competitors to collude.
But aside from this censorious closing down of cement market intelligence in SA and from across the country’s borders, Sephaku says the South African economy — although largely subdued in 2017 — is estimated to have achieved better-than-expected GDP growth of 1.3%, with a 3.1% growth surge in the fourth quarter of the year
This has apparently boosted the domestic cement industry, although this is hard to see without reference to composite and timeous data.
But Sephaku says estimated industry sales volumes — including imports — for 2017 were 12.9-million tonnes, a fall of 0.8% from the 13-million tonnes estimated in 2016.
Apart from rainfall in the first half of 2017, which hampers cement making, Sephaku enjoyed a recovery in demand in the second half of the year, while a 5% price increase across the board for the 12 months helped profits.
Steel markets around the world are quaking in their boots over Donald Trump’s imposition of tariffs of 25% on imported steel and 10% on imported aluminium products, respectively.
This comes amid the US president’s claims that the reliance of American manufacturers on imported metals jeopardises US national security.
He may be right. After all, who would want Kobe steel in their rocket launches of red Tesla roadsters into space or in Humvees during the pitch of battle in Iraq or Afghanistan after the Japanese steel giant admitted to decades of shipments of fraudulently specified steel.
That said, Trump is having difficulty raising funds for the wall he intends to build between the US and Mexico, which no doubt would require humungous amounts of steel.
But if memory serves correctly, he has already exempted Canada and Mexico from the proposed steel tariffs, provided they reach an agreement to revamp the North American Free Trade Agreement.
Also, Harley Davidson and the makers of Levi’s jeans and Kentucky bourbon will be none too pleased if he goes ahead with steel tariffs.
The EU has threatened to block these iconic products from its consumer markets.
As for South African steel producers, they stand to be hurt more or less depending on whether tariffs apply to primary steel products or secondary imports. Those details have not yet been confirmed.