Sephaku Holdings (SepHold), the concrete and cement supplier, swung back into a profit in the year to end-March, results released after the close of business on Thursday showed.
SepHold CEO Neil Crafford-Lazarus said the company had seen a strong recovery as lockdown restrictions were eased in SA.
“The 2021 financial year has been a contrast of what I can term the pandemic hard lockdown and the post-hard lockdown phase," Crafford-Lazarus said.
SepHold includes two businesses: Métier Mixed Concrete and Dangote Cement SA.
While the group reported consolidated revenue of R634m down 13% from the year to end-March 2020, it earned net profit after tax of R20m compared with a net loss after tax of R17m over the same periods.
Basic earnings per share were 7.83c, a large improvement on a basic loss per share of 8.12c suffered in the previous year.
Level five restrictions during the hard lockdown halted all of SepHold’s operations with limited administrative and maintenance activity throughout the group.
"The uncertainty of this initial phase led us to negotiate with the lenders on amending the debt repayment terms to accommodate the lack of activity," Crafford-Lazarus said.
"I am pleased to confirm that we successfully provided the prerequisite capital injections for both Métier and SepCem to enable the lenders to suspend capital repayments for nine months and five months of financial 2021, respectively," he said.
SepHold re-appointed Kenneth Capes on April 1 2020 as CEO of Métier following a three-year hiatus, with a mandate to restructure the subsidiary’s business model "to better align with the prevailing trading environment".
Crafford-Lazarus said severe macroeconomic distress caused by the pandemic accelerated the implementation of the restructuring process "to ensure that Métier emerged a lean and profitable business by the end of the financial year".
But he said SepHold had found that the ready-mixed concrete sector continued to experience low demand and high competition as a result of a significantly lower cost base for independent manufacturers and competition from aggregate product producers.
"Nonetheless, we are confident that the restructured Métier is well positioned to be profitable and competitive in new markets such as the Western Cape, where a plant is being constructed with production targeted to commence during the 2022 financial year," Crafford-Lazarus said.
In terms of the cement business, Sephaku experienced a surge in bagged cement demand from July onward as homeowners spent more money on home improvements.
Sephaku Cement recorded a 10% year-on-year rise in revenue, mainly because of increased sales volumes.
But the unit price increase was unfortunately muted due to competition from other cement producers, blenders and imports.
"We remain cautiously optimistic about the bagged cement uptrend, but acknowledge that a longer-term trajectory will require impetus from civil infrastructure," Crafford-Lazarus said.
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