PRETORIA – Listed Sephaku Holdings (SepHold), whose building and construction materials asset portfolio comprises subsidiary Métier Mixed Concrete and associate Dangote Cement South Africa (SepCem), has embarked on a cost-reduction programme aimed at reducing head office expenses in the next 12 months.
The company said yesterday that this was in response to the prevailing environment, with this programme including the reduction in the size of the board of directors from 10 to seven members by not replacing Mpho Makwana, who resigned from the board last month, and Rose Raisibe Matjiu and Kenneth Capes, who both resigned on Monday.
It would also implement cost management measures at head office, including reducing travelling expenses and other non-critical operational activities.
Lelau Mohuba, the chief executive officer of Sephold, said the building materials industry had experienced a severe operating environment for the past few years, characterised by declining demand mainly due to the depressed macro-economic performance.
“This has impacted the profitability of the group, resulting in a significant decrease in margins at Métier,” Mohuba said.
Sephold yesterday reported a 79 percent increase in group net profit to R26.52 million in the six months to September from R14.8m in the previous corresponding period.
Group headline earnings a share increased by 77.3 percent to 12.59c from 7.10c.
Mohuba attributed this to a significantly improved six-month performance by SepCem as cement price increases held in most markets, resulting in a 5.4 percent revenue increase to R1.16 billion year on year.
He said SepCem’s reduction in cost of sales by 3.2 percent because of a cost efficiency programme contributed to the higher profitability.
However, Mohuba said they had observed increased activity by blenders and importers in SepCem’s third quarter, which had placed downward pressure on cement volumes as demand remained stagnant.
“The cement landscape continues to be stable with isolated incidences of intense competition for highly profitable markets,” he said. SepCem equity accounted profit increased by R16.2m from the R5.79m loss in the prior period.
It had a project loan balance of R1.75bn at the end of June.
SepHold shares gained 7.65 percent on the JSE on Tuesday to close at R1.83.