Johannesburg - Distribution and Warehousing Network (Dawn) was expecting continued growth in its water infrastructure business and was going ahead with the expansion of its geographic footprint, the listed manufacturer and distributor of local plumbing and hardware brands said last week.
Derek Tod, the chief executive, said increased expenditure by the Water Affairs Department had had a direct impact on the throughput and profitability of the group’s infrastructure segment in the year to June. Headline earnings improved by 91 percent to the best level in the past four years.
Tod said this segment improved its results for the sixth consecutive reporting period since the lows of 2011. The segment comprises two clusters in DPI and Incledon and provided 36 percent of the group’s revenue of R4.89 billion in the past financial year.
The segment increased its revenue by 10 percent to R2bn and profit before interest and taxation grew by 48 percent to R64m from R43m as the operating margin improved to 3.5 percent from 2.6 percent.
Tod referred to analysis by Industry Insight indicating that expenditure in the infrastructure segment of construction improved significantly, with a 32 percent growth in tenders awarded in the past year.
Industry Insight added that market share of water projects as a percentage of total construction increased from 25.7 percent in the fourth quarter of last year to 34 percent in the first quarter of this year and expectations were that this momentum would continue.
Tod said delays in water and sanitation infrastructure expenditure by the government were unlikely, although always a possibility.
The building segment grew revenue by 7 percent to make up 56 percent of revenue, while stronger demand translated into margins rising to 7.5 percent from 6.1 percent.
Dawn International, whose financial contribution is included in the results of the building and infrastructure segments, increased its revenue to R1.3bn from less than R150m in the 2005 year.
Exports grew by 12 percent because of a concerted initiative to expand the export footprint, assisted by a weak rand.
Tod said that with the establishment of a greater foothold in African markets, the group was fast becoming a solutions provider and distribution channel of the Dawn product range into the rest of Africa.
Its geographic footprint was being further expanded, with initiatives including the establishment of a DPI factory in Zambia together with Incledon International to service the mining and related industries; the opening of a second AST trading operation in the north of Mozambique and an additional AST operation in Kenya. AST supplies building products.
On Thursday Dawn reported a 74 percent growth in headline earnings a share to 66.1c in the year to June.
Revenue increased 8.5 percent to R4.6bn and operating profit grew 55 percent to R253m.
Cash generated from operations improved by 44 percent to R341m. A final dividend of 16.5c a share was declared. A dividend was not declared in the previous year.
The share rose 4.86 percent to close at R9.70 on Friday. - Business Report