Still no light for Dawn
New CEO says industrial player is operating below its fixed-cost breakeven point as it posts yet another loss
To understand why industrial player Distribution & Warehousing Network (Dawn) has been in trouble for the past few years, one need look no further than the country’s struggling mining, construction and building industries and, more recently, agriculture. Add to that a global financial crisis and the lack of countercyclical spend in major infrastructure by SA’S government and you have a trifecta for disaster.
In its annual results to March 2016, Dawn posted a net loss of R758m. It has now posted an attributable loss of R637m in the year to March 2017.
As a maker of materials and tools for these sectors, including branded bathroom and kitchen fixtures, the company has been buffeted by lower mineral resources prices, foreign exchange volatility and years of political and labour instability.
Dawn is a complex business made up of about 32% manufacturing turnover and 68% from distribution. The trading arm of the company manages about 50,000 different product lines.
For many years it has been “right-sizing”. New CEO
Edwin Hewitt is unequivocal: the company has long been operating below its fixed-cost breakeven point.
To remedy this, significant investment has been made to bring its manufacturing technology up to date.
Recently, though, amid continuing poor market conditions and the effects of widespread drought, the group has also been pummelled by political and economic turmoil in its Mozambican, Zimbabwean and
Angolan markets, where currencies have plunged and foreign exchange has been scarce.
In SA, Dawn says, delayed government spending on major water projects has been a big obstacle to growth. Meanwhile, China has stepped on the toes of just about every market the majority shareholders of its associate company Grohe
Dawn Watertech (GDW) operates in.
In late 2014, Dawn, the maker of
Cobra taps and Vaal sanitaryware brands, sold 51% of GDW to Germany’s Grohe. This happened just as