FLOORING, chemicals, glass and aluminium construction company yesterday posted a 53% drop in headline earnings to 9,30c for the year to June due to an unbudgeted slower increase in energy costs and demand for its flooring products .
CEO Fred Platt described the year as a “tale of two halves.” With demand for the flooring products at unprecedented levels, record revenue was achieved in the first half, although rising commodity and input costs, squeezed margins
The second half started with demand at high levels, but there was a dramatic slowdown in March, aggravated by many public holidays and the April election, which disrupted the government’s infrastructure spending pattern.
Rising competitive pressures and input costs and narrowing margins caused after-tax profit to fall 43% to R9,4m, but revenue rose 16% to R298m.
A dramatic downturn in the aluminium market and the historical reliance on sectors such as motor showrooms hugely affected the contribution of the Centurion Glass & Aluminium (CGA) subsidiary.
CGA’s niche markets suddenly came under severe pressure, requiring the company to refocus on segments that offered opportunities for growth.
“Much attention has been placed on this area of the business as well as on managing the cost structure with emphasis on effective and efficient management systems and some management changes,” said Platt.
CGA’s order book, which suffered a dramatic downturn in the previous financial year because of the slowdown in private construction activity, had now been restored to 100% of capacity for the first nine months of the financial year.
Accentuate’s chemical business, Safic continued its growth with higher revenue and reduced cost.
The margin slide in the chemical business because of the sharp rise in commodity prices had been corrected.
The chemical division contributed R4,3m to net profit.
Platt said the company’s most recent acquisition, Interior Wooden Floors, which it bought last year for R11m, had been integrated into the company’s business model.
He said that the group was now in a position to take advantage of the opportunities presented in the government’s infrastructure development plan with special reference to the upgrading and construction of hospitals, clinics, schools and the public transport sector.
mokopanelet@bdfm.co.za