JOHANNESBURG - Sephaku Holdings’ associate company Dangote Cement South Africa (Cement) reported a R90million improvement in second-half profit to R73.9m compared with a first-half loss of R16.1m.
The company said yesterday that the result took its annual profit for R57.8m.
Sephaku has a 36percent stake in Cement and a 100percent interest in Métier Mixed Concrete, the supplier of quality ready-mixed concrete products and concrete pumping services.
Dangote Cement, Africa’s largest cement producer, owns 64percent of Cement.
In the 12 months to the end of December last year, Cement increased revenue by 3.7percent.
In February 2018, Dangote Cement South Africa implemented a 5percent price increase across all its markets for the bagged cement.
Cement’s earnings before interest, tax, depreciation and amortisation margin - which measures a company’s operating profitability as a percentage of its total revenue - was 21.3percent. Net profit was R57.8m, down from the previous R68.9m in 2016.
In the update, Sephaku alluded to the subdued South African economy last year. It said estimated industry sales volumes, including imports for 2017, were 12.9million tons, representing a decline of 0.8percent from the 13million tons in the previous year.
Although Cement’s performance in the first half of last year was weak, resulting in the R16.1m loss, the company reversed its fortunes in the second half of the year. It attributed the improvement to increased demand and better operational efficiencies.
“The enhanced business sentiment due to perceived political stability is broadly expected to increase investment into all major industries. Nonetheless, the economy is likely to remain under pressure for the next 12 to 18 months, as the anticipated pro-business monetary and fiscal policies are implemented.
“The South African Reserve Bank increased its (gross domestic product) growth forecast from 1.2percent to 1.4percent and the World Bank published a forecast of 1.1percent for 2018. These forecasts have provided an improved macro-economic landscape for the cyclical building materials industry,” Sephaku said.
Sephaku’ declined 5.54percent on the JSE yesterday to close at R2.56.