South Ocean shakes off Covid-19 and returns to profitability
DURBAN - SOUTH Ocean Holdings said yesterday that it shook off the impact of Covid-19 by reporting a surge in earnings for the year to end December despite experiencing trading restrictions in its electrical cables division.
However, despite the negative impact and lost trading days, the group reported an increase in operating profit to R38.1 million for the year to end December, up from an operating loss of R8.8m reported a year earlier. SOEW, a manufacturer of low voltage electrical cables, felt the effect of the Covid-19 disruption, especially under the level 5 lockdown.
The investment holding company said during this period, the businesses in the cable industry were not considered essential services and were unable to operate.
“The group suffered financial losses during this period as it was unable to produce or trade during the nationwide lockdown.
“As restrictions eased to level 4, SOEW applied for and received an essential services certificate, and it was able to commence production and trade at one third of normal capacity,” the group said.
The group’s sales volumes were impacted in April and in the first half of May as the country was placed under level 5 of the national lockdown. However, its operations ramped up again in the second half of May, post the lifting of the Covid19 restrictions imposed at the end of March.
“The impact of the government’s lockdown restrictions on the group’s operations has been challenging, and with the full effects of the crisis on the group being uncertain, trading conditions have improved as the economy progressively reopened in line with the government’s riskadjusted strategy,” the group said.
At year-end, SOEW reported a 10 percent increase in revenue to R1.74 billion.
The overall group revenue increased by 12 percent to R1.77bn despite the Covid-19 impact and its headline earnings increased to R27.1m from a headline loss of R8.4m and headline earnings per share climbed to 13.32 cents a share from a loss of 4.14c and its basic earnings per share improved 13.25c from a loss of 7.80c compared to last year. The group declared a dividend of 3c.
The group’s other division, the Anchor Park, its property investment, reported a revenue of R23.42m during the year, slightly down from R24.87m compared to last year. The group said Anchor Park’s revenue was derived mainly from group companies as it leases its properties to fellow subsidiaries.
Looking ahead, South Ocean said the macro-economic environment in which it operated was not expected to improve soon.
“The group is, therefore, focusing on reducing costs and using technology to drive growth, productivity and greater efficiencies in a more sustainable manner which will improve the profitability of the operating entities,” the group said.
South Ocean shares closed 5.80 percent lower at R0.65 on the JSE yesterday.