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JSE-listed Distribution and Warehousing Network (Dawn) on Friday said that, despite a “very challenging” six months to December 31, the company still expected to achieve a 5% to 10% increase in revenue to between R2.3-billion and R2.4-billion.
However, the building materials provider expected its core operating profit to plummet by 55% year-on-year, from R93.4-million in the six months to December 2013, to R42-million in the period under review.
Dawn further expected to report a headline loss a share of 27c for the six months to December, a 170% decrease from the headline earnings per share (HEPS) of 41c recorded in the prior comparable period.
HEPS were impacted by one-off transaction costs relating to its Grohe and AST transactions, as well as strikes by members of the National Union of Metalworkers of South Africa in both the building and infrastructure segments.
Dawn’s earnings per share (EPS) were expected to have increased by between 487% and 492% to between 231c and 233c, compared with 41.4c in the six months to December 2013.
EPS gained from the disposal of 51% of the watertech and sanitaryware clusters to Grohe, as well as the step-up cost of the AST business to a 90% equity holding.
“Operating profit was heavily affected by the impact of significant delays in [the] execution of government contracts on the group’s infrastructure segment and a stable, but soft, building segment market, which includes R6.1-million in new business development cost,” the group said in a statement.
Further, it noted that its solutions segment’s performance was affected by R6-million in additional one-off costs for its warehouse conversion programme.
Although businesses in the infrastructure segment had healthy order books, their results were negatively affected by 37 power disruptions that “crippled manufacturing capacity and by government tender and order implementation delays,” the group stated.
Dawn noted that management had taken swift action to address areas within its control, such as margin management and cost control. “Benefits are expected to flow through into the next quarter of the financial year. The group is investing in generators and uninterruptable power supplies facilities to counter the impact of continued load shedding and power disruptions on the group’s operations,” it added.
The group’s interim results would be released on February 16.