Building and construction materials group Sephaku Holdings (SepHold) has cut debt and reduced expenses as it expects low demand for building materials in the next two years because of the sluggish economic growth.
“We expect the building materials’ demand to remain constrained due to the short-term challenges in stimulating the economy against the backdrop of high sovereign debt and loss-making state-owned entities,” SepHold CEO Lelau Mohuba said.
In the six months ended March, the company, which owns mixed concrete maker Métier, reduced expenses by R4.8m. The group said its target was to reduce expenses from the current R22.9m to R18.4m by the end of March 2020.
Métier had reduced its capital debt by R39.7m to R121.7m by March 31.
SepHold has cut debt by R1bn since the 2015 financial year.
“Our outlook for the next 12 to 24 months remains negative, anticipating anaemic growth unless the newly elected government urgently provides requisite impetus through pro-infrastructure investment policies.”
SepHold’s profit after tax was relatively flat at R44m while headline earnings per share increased from the previous 20.92c to 21.08c.
Meanwhile, SepHold said it would pass on the cost of SA’s new carbon tax to customers through higher prices. The tax on cement manufacturers for carbon emissions became effective on June 1.
Sephaku Cement will “increase prices by [between] 4% [and] 6% in July 2019 as per standard biannual increase and in line with carbon taxes,” the company said.
SepHold expects its carbon emissions tax to be between R35m and R40m per year.
The group’s shares were down 4.15% to close at R1.85. It has a market capitalisation of R385m.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.