Photo by: Duane Daws
Engineering and construction group Wilson Bayly Holmes-Ovcon (WBHO) has warned that it expects to impair its Mozambique-based steel business Capital Star Steel (CSS), following insufficient production and aggressive competition in the international project pipe market.
CSS is a subsidiary of Capital Africa Steel (CAS), the company through which WBHO operates its construction materials businesses. CAS had provided CSS with R120-million of working capital funding in support of two recovery plans.
However, the profitability of CSS was “severely affected” by various production stoppages, which has continued into the second half of the year.
“This, combined with the assets of CSS being materially less than their current carrying amount of R539-million, will likely result in an impairment thereof,” the group said in a statement on Friday.
WBHO noted that the impairment would affect earnings a share, but would not impact on headline earnings a share.