Argent resorts to salary cuts

STEEL supplier Argent Industrial Company said yesterday that it had resorted to salary cuts to mitigate against the market meltdown despite a marginal rise in steel prices this year.

The firm said it reverted to the measures after the strike by members of the National Union of Metalworkers of SA (Numsa) last year to contain its costs.

“The strike had cost us a lot of money but after the strike we started to work and apply salary cuts to workers,” Argent executive director Fred Litschka said yesterday.

Steel prices have risen moderately since the beginning of the year partly as a result of a rebound in China, surging to better levels since 2014 to boost iron ore.

Litschka said the firm was optimistic that prices would continue to rise, which in turn would enhance its balance sheet. “We had been growing our finance with 20 percent from the past two years, and I hope we will carry on with this current growth.”

The company said it anticipated its final results for the year to be similar to those recorded in the first half.

It said it expected headline earnings per share to grow between 15.4 percent and optimistic the firm would grow further despite the prevailing global trading conditions. “The volume of steel is good in South Africa and we expect to continue with growth. We have been operating cleverly and making… good decisions. And we know the price of steel does not affect demand. People will buy steel even when the prices are higher, there is no substitute for steel,” he said.

Litschka said the firm was not afraid of the threat that competitors might pose. “We serve the same customers… and we import and export for the same countries. So I know a bit about our competitors.”

Argent, which sold its Giflo engineering property for R10.5 million last year, said the selling of properties had not affected its finance as “they were non-manufacturing companies”.

It said it would concentrate its efforts on the acquisition of core assets such as the 100 percent stake if acquired in the UK-based OSA Warehouse Door for $3.23m (R45m) in July.

Litschka said the acquisitions had helped the firm maintain its competitive advantage. “All acquisitions are doing well, especially Jerk Masters and Xpanda for exports.”

Argent shares rose 2.38 percent higher on the JSE yesterday to close at R4.30.