SepCem gains traction in SA as it ramps output
NEW KID ON the block Sephaku Cement (SepCem) swung to a profit in the year to March as production ramped up to a steady state at its two clinker plants, the Nigerian backed company said on Friday.
Sephaku is the first entrant in South Africa’s cement industry since 1934, and is focused on production at its high-tech clinker plants in Delmas in Mpumalanga and Lichtenburg in the North West.
In its year to March report released on Friday, Sephaku recorded profit before tax of R72 million and net profit of R47m. Revenue rose by 36 percent to R775m from R571m in the previous comparative period.
Earnings before interest tax depreciation and amortisation (Ebitda) amounted to R128.9m for the year, and operating profit of R59.3m was recognised on group level.
Finance costs of R25.3m were incurred on the Metier acquisition debt and asset finance and further includes an amortisation charge of R4.8m on the discounting of the vendor loan.
Sibonginkosi Nyanga, an analyst with Imara SP Reid said the results have shown that the company is gaining traction.
SepHold’s 36 percent interest in SepCem’s operations for the year ended 2014 resulted in equity accounted earnings of R35.9m.
Included in this figure is a movement in the associate’s deferred tax asset of R154m, relating to a statu- tory tax incentive that was accounted for in the reporting period.
The tax adjustment brought about an increase in SepHold’s equity accounted earnings of R55.4m.
SepCem posted an operating profit of R59.5m and a loss before taxation of R48.4m due to it being in ramp up phase during the reporting period.
Metier continued to achieve positive earnings by attaining an operating profit of R108.9m for the year ended March.
The revenue increase to R775.4m from R571.5m for the comparative period was mainly due to the expansion in the plant network and growth in market share.
Sephaku chief executive Lelau Mohuba said the company was pleased to have commenced clinker production at Aganang because it had improved cost efficiencies and enabled SepCem to remain highly competitive.
SepCem’s market penetration success has continued into their new financial year as reflected by the increased quarterly sales for the period ended March 31 of approximately R521m, a 29 percent increase from R405m in the fourth quarter of 2014.
“Our main focus going forward is to sweat the assets and increase free cash flows in preparation for the distribution of dividends to our shareholders,” Mohuba said.