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Building materials group expects African sales to continue to grow

5th April 2013

By: Irma Venter

Creamer Media Senior Deputy Editor

  

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Building and civil products supplier and manufacturer Dawn has reported a healthy improvement in its financial wellbeing, recording profit of R90.1-million after tax for the six months ended December 31, 2012. This was an 88% improvement over the comparable period in the previous financial year. It was also more than the profit after tax for the whole of the 2012 financial year, reported as R84.3-million.

Dawn also saw a 10% increase in revenue for the six months ended December 31 to R2.3-billion, while headline earnings per share were up 89% to 38.1c a share.

Africa was taking an ever-increasing share in the group’s business, growing from around 17% of revenue two years ago to the current 22% to 23%, noted Dawn CEO Derek Tod.

He said the aim was to increase this to between 33% and 35%, with the African mining, residential and property development sectors providing good business opportunities to the tap, sanitaryware and pipe producer.

“There is no question that business opportunities in Africa have significantly improved, compared with past years,” said Tod. “We have a clear strategy to roll out in more markets.”

That said, however, markets that had not delivered quite the results Dawn desired included Nigeria and Angola, but circumstances in these countries were improving, noted Tod.

He added that the group’s success in the first half of the 2013 financial year could, in part, be attributed to stronger margins achieved on a much lower cost base.

The group operating margin improved from 4.1% to 6%.

Dawn’s building division benefited from a 7% increase in total buildings completed in South Africa in the six months ended December 31, 2012, compared with a 4% drop seen in the comparable six months in 2011, said Dawn COO Collin Bishop.

Building revenue then also increased by 6%, while profit before income tax was up 36%, to R124-million.

Bishop said the sanitaryware unit within the building division saw “a significant turn- around”, contributing to the positive numbers. Sanitaryware managed to transform a R19-million loss in the first half of the 2012 financial year to a R4-million profit for the first half of the current financial year.

Bishop noted that this turnaround was expected to continue.

Dawn Infrastructure saw a 15% increase in revenue to R975-million and a 67% jump in profit before interest and tax (PBIT) to R28-million.

Dawn Solutions, which incorporated logistics and marketing, for example, increased revenue by 21%, to R185-million, with PBIT at R9.1-million, up from R50 000.

Tod said, although the outlook for the building and infrastructure markets was robust, there remained some key risks, such as “financially stretched consumers” and delays in spending at provincial and central government.

However, the recent weaker rand promised to deliver a “net positive effect” on Dawn, as the group’s imports were marginal.

“The second half of the 2013 financial year is likely to show a sound improvement for Dawn over the second half of the 2012 financial year,” Tod added. “The medium to longer term outlook is very encouraging.”

Edited by Creamer Media Reporter

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