http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 13.96Change: -0.06
R/$ = 12.75Change: -0.01
Au 1081.65 $/ozChange: -8.21
Pt 979.00 $/ozChange: -9.00
 
 
Note: Search is limited to the most recent 250 articles. Set date range to access earlier articles.
Where? With... When?








Start
 
End
 
 
And must exclude these words...
Close Main Search
Close Main Login
My Profile News Alerts Newsletters Logout Close Main Profile
 
Agriculture   Automotive   Chemicals   Competition Policy   Construction   Defence   Economy   Electricity   Energy   Environment   ICT   Metals   Mining   Science and Technology   Services   Trade   Transport & Logistics   Water  
What's On Press Office Tenders Suppliers Directory Research Jobs Announcements Letters Contact Us
 
 
 
RSS Feed
Article   Comments   Other News   Research   Magazine  
 
 
Mar 10, 2011

Dawn’s headline earnings fall as markets remain ‘cut-throat’

Back
Building|Pipe|Infrastructure|Pipe
Building|Pipe|Infrastructure|Pipe
building|pipe-company|infrastructure|pipe
© Reuse this



JSE-listed building and infrastructure sector supplier Dawn reported a big drop in interim headline earnings as markets remained “cut-throat”, CEO Derek Tod said on Thursday.

“Although we anticipated that the decline would continue into the first half of this reporting period, we didn’t realise just how tough it would be,” he said, announcing a 52% decline in headline earnings a share.

Dawn posted headline earnings of 15,2c a share, compared with 31,9c a share in the first half of the 2010 financial year. Headline earnings a share were 11% lower than the 17c a share achieved in the previous half-year, indicating a slowing in the rate of the decline.

“To paint a picture of just how difficult it is out there, volumes and prices in the majority of our businesses have declined sharply for four successive reporting periods now,” Tod stated.

Operating profit declined by 48% to R63-million from the corresponding period’s R121-million.

“Reduced volumes and the delay in corrective market strategy resulted in substantially lower margins at 3,4% against 6,5% achieved a year ago, and significant losses. Although we achieved market gains, its effect was diluted by the volume declines,” he noted.

Dawn’s revenue decreased marginally from R1,87-billion in the first half of 2010 to R1,84-billion in the current reporting period.

The company owns brands such as Cobra taps and Vaal Sanitaryware, as well as pipe manufacturer DPI Plastics.

Dawn’s building division contributed 58% of group revenue, while its infrastructure division contributed the balance.

The building division completed 21% fewer buildings in the six months and recorded a 1% decline in revenue.

Tod noted that competition was “cut-throat” and added that margins were under severe pressure.

“In these tough times, sale at a lower margin is better than no sale at all. We are now in competition for a piece of a smaller pie,” he said.

COO Collin Bishop added that the strong rand also negatively impacted on exports and increased import competition.

“Further, salary increases were delayed in the first half of the 2010 financial year, which made it necessary in the first half of 2011,” he noted.

Meanwhile, the infrastructure division saw disappointing results with industry awards down 40%. The division reported a 3% decline in revenue, while volumes fell by 7%.

Another reason for the decline was a concealed accounting error, which had a R6-million negative impact on the volumes and profit of the business.

However, the company still grew its market share and reduced costs.

Dawn aimed to improve its profitability with further cost reductions of about R11-million for the second half of the 2011 financial year.

Tod pointed out that working capital was unlikely to improve until market volumes increase.

“We are moving our focus from cost-cutting, efficiency evaluations and right-sizing to growing our market share. Even a small improvement in volumes will have a positive impact on the bottom line,” he said.
 

Edited by: Mariaan Webb
Creamer Media Senior Researcher and Deputy Editor Online
© Reuse this Comment Guidelines (150 word limit)
 
 
 
 
 
 
 
 
Other Construction News
Updated 9 minutes ago JSE-listed Aveng has appointed McDermott International commercial senior VP Scott Cummins as CEO of its Asia and the Pacific subsidiary McConnell Dowell, effective October 1. Cummins would succeed outgoing CEO David Robinson, who was retiring this year, but would...
POWER POTENTIAL Central Africa has significant hydropower potential to meet both its local and export requirements
The forecast increase in demand for electrical energy in the sub-Sahara Africa region has prompted heads of States to endorse an investigation of the 15 most promising hydropower projects, worth an estimated $50-billion, says black-owned engineering consulting firm...
IRRIGATION Botswana plans to use some of the water from the Zambezi river for agriculture
The Botswana government is accelerating construction of a 16-billion pula ($1.6-billion) pipeline meant to carry water from the Zambezi river to the south of Botswana, as the government wants to complete the project in seven years. The negotiations, and other...
More
 
 
Latest News
Updated 8 minutes ago JSE-listed Aveng has appointed McDermott International commercial senior VP Scott Cummins as CEO of its Asia and the Pacific subsidiary McConnell Dowell, effective October 1. Cummins would succeed outgoing CEO David Robinson, who was retiring this year, but would...
Updated 56 minutes ago The mass exit of thousands of Telkom employees came as no surprise, trade union Solidarity said this week. Nearly 2 400 employees had opted for Telkom’s voluntary severance packages (VSPs) and officially parted ways with the embattled company on Friday.
Updated 1 hour 14 minutes ago JSE-listed RCL Foods, through a shareholding in Hudani Manji Holdings (HMH), intends to enter the East African region with an “established reputable partner”, creating one of the largest processors and marketers of chicken in both Uganda and East Africa. The...
More
 
 
Recent Research Reports
Real Economy Year Book 2015 (PDF Report)
There are very few beacons of hope on South Africa’s economic horizon. Economic growth is weak, unemployment is rising, electricity supply is insufficient to meet demand and/or spur growth, with poor prospects for many of the commodities mined and exported. However,...
Real Economy Insight: Automotive 2015 (PDF Report)
Creamer Media’s Real Economy Year Book comprises separate reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, gold, iron-ore and platinum sectors.
Real Economy Insight: Water 2015 (PDF Report)
Creamer Media’s Real Economy Year Book has been divided into individual reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, coal, gold, iron-ore and platinum sectors.
Real Economy Insight: Construction 2015 (PDF Report)
Creamer Media’s Real Economy Year Book has been divided into individual reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, coal, gold, iron-ore and platinum sectors.
Real Economy Insight: Electricity 2015 (PDF Report)
Creamer Media’s Real Economy Year Book has been divided into individual reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, coal, gold, iron-ore and platinum sectors.
Real Economy Insight: Road and Rail 2015 (PDF Report)
Creamer Media’s Real Economy Year Book has been divided into individual reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, coal, gold, iron-ore and platinum sectors.
 
 
 
 
 
This Week's Magazine
Daimler truck test engineer Dirk Stranz pushes one button, and then retracts his hands from the steering wheel of the Mercedes-Benz Future Truck 2025. “And now the truck is driving itself.”
The statutory body responsible for skills development and support in the banking sector, BANKSETA, was investing R68-million in the capacity building project of the University of Venda (UniVen), announced Bankseta company secretary Caroline King at a media event in...
LIONEL MOYAL Cloud services providers must compete against other cloud services providers for business by providing up-to-date systems and services
Legacy information technology (IT) systems are becoming increasingly obsolete because of the maturity, efficiencies and cost effectiveness of cloud-based IT services, says information and communication technology major T-Systems subsidiary Intervate head Lionel...
ARMANDÉ KRUGER Balancing the collection and processing of data must be aligned to strategy
Many complementary services enable companies to derive broad value from data inside and outside them. The complexity of data management means that companies’ strategies determine the various data systems and functions they will use, says PBT Group regional sales...
The South African Civil Aviation Authority (SACAA) has announced that it had awarded the country’s first remotely piloted aircraft systems (RPAS) pilot’s licence. It was issued on Friday, July 10, to SACAA employee and qualified commercial pilot Nicole Swart,...
 
 
 
 
 
 
 
 
 
Alert Close
Embed Code Close
content
Research Reports Close
Research Reports are a product of the
Research Channel Africa. Reports can be bought individually or you can gain full access to all reports as part of a Research Channel Africa subscription.
Find Out More Buy Report
 
 
Close
Engineering News
Completely Re-Engineered
Experience it now. Click here
*website to launch in a few weeks
Subscribe Now for $96 Close
Subscribe Now for $96