Johannesburg - Distribution and Warehousing Network (Dawn) is significantly expanding its African footprint while still growing its operations in its South African home base.
Derek Tod, the chief executive of the listed manufacturer and distributor of local plumbing and hardware brands, said yesterday that the revenue from its African operations was expected to increase from 21 percent of group revenue now to between 30 percent and 35 percent, while the company also grew its local business.
Revenue from the group’s international business grew by 16 percent to R797 million in the six months to December last year from R689m in the previous interim period, and raised its contribution to total group revenue by 1 percentage point in the same period.
Dawn is active in Zambia, Angola, Mozambique, Namibia, the Democratic Republic of Congo (DRC), Kenya, Mauritius, Nigeria and Zimbabwe and already has pipe manufacturing plants in Mauritius, Tanzania, Namibia, Angola and Botswana.
Tod said the group was busy establishing a manufacturing facility in Zambia and aimed to have a manufacturing facility in Kenya from the beginning of the next calendar year.
Collin Bishop, Dawn’s chief operating officer, said that the group’s current initiatives in Africa included the establishment of an Incledon Trading company in Zambia and Mozambique plus an AST Trading outlet in northern Mozambique.
Bishop added that trading was growing steadily in the DRC and Tanzania.
He said the company’s exports from South Africa into Africa rose by 14 percent to R415m in the six months to December, compared with the previous corresponding period, because of an increased focus on exports and the positive impact of the weaker rand.
He said the DPI plastics factories in the rest of Africa grew revenue by 14 percent to R265m because of increased demand, while the AST group posted strong revenue growth of 26 percent to R117m as these businesses continued to entrench their African presence.
Dries Ferreira, Dawn’s financial director, said the group had previously announced it had embarked on a capital expenditure programme to enhance capacity, increase efficiency and save costs, with R77m of these costs already incurred in the group’s 2013 financial year.
Ferreira added that R14m had been invested in the reporting period to maintain capacity and a further R87m in manufacturing, logistics and information systems.
Ferreira said that R30m of this amount would be refunded by the Department of Trade and Industry from grants already approved under the manufacturing competitiveness enhancement programme.
Ferreira said the level of expansionary capital expenditure by the group was indicative of its confidence in the sustainability of activity into the future in the areas that it had been spent.
He said R153m in total capital expenditure was spent in the 2013 financial year and a further R150m would be spent in this financial year, with capital expenditure normalising at about R100m a year from the group’s 2015 financial year.
Dawn yesterday reported an 8 percent growth in headline earnings a share to 41.1c for the six months to December from 38.1c in the previous corresponding period.
Group revenue rose by 17 percent to R2.6 billion from R2.2bn, which was boosted by the acquisition of Swan Plastics in August and Ubuntu Plastics in March last year that added R129m to group revenue during the reporting period.
Cash generated from operations increased 16 percent to R207.9m from R179.6m.
Tod said the group’s outlook was robust because of improved margins resulting from better price recovery.
The share price dropped 3.64 percent to close at R9.01 on the JSE yesterday.