Durban - Infrasors was trying to diversify its client base towards the industrial sector and away from construction to mitigate the effects of the slowdown in the economy, Walter Stander, its head of corporate affairs, said yesterday.
Stander said the mining and beneficiating firm, which supplies minerals to industry and construction, had refocused its businesses and would be cutting costs across the board to protect its margins.
"In our brick business, instead of continuing sales to our residential market, we are now targeting the big contractors are involved in big projects like the Gautrain," said Stander. "We were delivering directly to the end users, but we are now delivering to the distributors."
Infrasors is feeling the effects of a slowdown in the real economy because of worldwide market turmoil. It is receiving fewer calls from people who want to place orders.
The implementation plan for the cost cutting had not been finalised, but possibilities included outsourcing certain functions, Stander said. "We want to mine more efficiently and maybe outsource mining processes such as loading and hauling."
Stander said shedding jobs would be the last resort and it was management's priority to keep all the employees, who number about 350. The company's subsidiaries are Lyttelton Dolomite, Delf Sand, Infrabric and Pienaarspoort.
Infrasors said revenue in the six months to August rose 7.4 percent to R154 million. Net profit fell to R25 million from R32.3 million a year earlier. Capital spending of R20.4 million was incurred.
Stander said these were reasonably strong results in a weak economy. "There is a part of our business which is linked to the residential market, and we saw a decrease in the margins, but we managed to refocus our bricks business."
Profit fell because of higher tax and input cost pressure. "Unfortunately, we can only have two increases every year and we will only be able to recover these costs in January," Stander said.
The firm is waiting for final approval of a mining licence at Pienaarspoort. It expects to mine 1 million tons of metallurgical silica a year. Additional property of about 600ha has been acquired for additional silica mining activity to come on stream in the 2010 financial year.
Infrasors was unchanged at R1.79 on AltX yesterday.