Sephaku swings to a loss as infrastructure spending dries up

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Sephaku swings to a loss as infrastructure spending dries up

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Published Date: 2020-08-12 | Source: Stephen Gunnion | Author: Stephen Gunnion

Sephaku swings to a loss as infrastructure spending dries up

The building and construction materials group says Covid-19 could not have come at a worse time for the industry.

Sephaku Holdings has swung to an annual loss as the continued decline in infrastructure investment resulted in reduced demand for its products. The building and construction materials group says low barriers to entry in the sector have also resulted in aggressive pricing by independent mixed-concrete manufacturers to secure supply contracts.

Sephaku, the holding company for Métier Mixed Concrete and Dangote Cement South Africa (SepCem), said the country's business cycle had experienced more than 70 months of downturn, the longest on record, impacting infrastructure investment, the construction industry and the concrete sector by extension.

For the year to end-March, SepHold reported a 13% decline in revenue to R727 million and an operating loss of R4.6 million, down from a R14.7 million operating profit last year. It swung to a net loss of R17.4 million from a R44 million profit and a headline loss per share of 7.97c from earnings of 21.08c. Equity accounted earnings from SepCem amounted to R0.5 million, down from R46.3 million previously.

Sephaku said Covid-19 had a marginal impact on its performance as the lockdown was implemented just a few days before its year-end. From 27 March to 30 April, it closed all its operations, with Métier and SepCem resuming operations at 50% capacity during alert level 4 in May and full operations at alert level 3 from 1 June. It said the pandemic would have a greater impact on its performance for the current year.

Sephaku's shares fell 5.7% to 33c in thin trade yesterday morning. The results were released after the end of trade.





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