Profit margins ‘will remain tight’

LISTED construction materials group Mazor expects that profit margins in the sector in which it operates will remain under pressure “for some time” because of oversupply and intense competition. Ronnie Mazor, the group’s chief executive, said yesterday that rationalisation was not occurring at the pace required to ensure sustained price increases, and demand-side inflation would remain low. “Although the year in review has been comparatively stable economically and politically, we anticipate some political and economic uncertainty in South Africa in the year ahead, particularly in terms of fiscal policy and rising finance costs,” he said. Mazor said all the group’s divisions increased their revenue in the year to February. Group revenue grew 18.5 percent in the year to February, from R491.7 million to R582.8m. Operating profit rose 35.8 percent, from R40.9m to R55.6m. Headline earnings a share increased 62 percent, from 26.9c to 43.6c. A dividend of 14.4c a share was declared, which was 69 percent higher than the 8.5c a share declared in the previous year. Mazor said the glass division returned strongly to profitability following a successful product-focused strategy and optimised efficiencies. The division reported an operating profit of R16.4m after a loss of R4.6m in the previous year. Revenue grew 11.5 percent to R155.7m. The aluminium division’s operating profit declined 28.5 percent, from R37.4m to R26.8m,despite revenue increasing 4.5 percent to R293.4m. Mazor said the steel division increased its revenue significantly during the year despite the rising cost of materials. The division raised its operating profit 136 percent, from R4.1m to R10.8m. Revenue grew 87.5 percent to R133.8m. Mazor’s shares fell 1.33 percent on the JSE yesterday to close at R2.22. – Roy Cokayne