Buildmax records loss amid low commodities demand

BUILDMAX shares took a hammering on the JSE yesterday, falling more than 5 percent after the listed opencast mining contractor and building materials supplier reported that it had recorded a basic loss of R24.5 million for the six months ended in August as a result of over-stocking in the supply chain.

The company said the over-stocking, the sluggish Chinese economy and the drop in demand for mining commodities weighed heavily on its bottom line.

It said the basic loss for the period under review was 69.5 percent lower than the previous year.

The group’s net debt reduced by R101.6m to R245.4m, while its tangible net asset value and net asset value per share decreased from 206.5c to 111.8c.

The company said revenue from continuing operations rose 29 percent to R420.5m, while operating loss declined by 74 percent to R9.6m.

“While coal prices have started to recover, Eskom’s management of coal procurement, coupled with unpredictable export demand, has resulted in very few new coal mining projects and unpredictable export demand,” the company said.

Buildmax operates three units that focus on providing mining services to the opencast coal mining, equipment sales and rental, and providing civils and bulk earthworks to the mining sector.

The company said current liabilities exceeded its current assets by 64.2 percent due to the short-term portion of its long-term debt.

It said it had engaged with its creditors to ensure sufficient capital was at hand.

The group said it had not incorporated any possible benefit from the liquidation process of Messina Copper Botswana in its interim results. Buildmax was awarded the Messina copper contract in 2014 to provide services at Africa Copper’s Thakadu and Mowana mines in Botswana.

The company reported a pre-tax impairment of R144m in the year to February due to the inability of Messina Copper to meet its payment obligation to Diesel Power Botswana, a subsidiary of Buildmax.

The group said while it needed to retain and attract skilled staff, it had offered voluntary retrenchments due to lower volumes of work.

Buildmax shares fell 5.56 percent to close at 17c.