JSE-listed Sephaku Holdings on Thursday reported a net profit of R18.5-million for the six months ended September 30, compared with a loss of R3.74-million in the six months to September 2014.

The group also reported revenue of R461.4-million for the period under review, compared with revenue of R404.2-million in the prior comparative period.

The higher revenue was attributed to increased output from ready-mixed concrete products subsidiary Metier's eleventh plant, which started production in September 2014.

However, the subsidiary recorded an earnings before interest and taxes (Ebit) margin of 13%, or R59.8-million, which was slightly lower than the 15% recorded in the prior comparative period, mainly owing to increased price competition, as well as Metier management's decision to cease supply into a significant government contract for a period of six weeks in the interim period, as a result of inconsistent payment.

Meanwhile, SepHold said its Sephaku Cement (SepCem) subsidiary had reached steady-state capacity use for both its plants in May.

SepHold expected a strong year ahead, with Metier entering the 2016 financial year with a robust order book, having secured four anchor supply contracts ranging from 50 000 m³ to 75 000 m³.

It added that SepCem would continued to advance its share of the market. “The pricing landscape has become dynamic and highly differentiated geographically resulting in downward pressure on margins.

“The competitive landscape was fairly aggressive during the period under review with all producers focusing on improving efficiencies and marketing efforts,” it added.

During the interim period, SepCem also adopted a defensive coastal strategy against imports in areas where it had a natural competitive advantage, resulting in about 20% of its volumes being sold into the KwaZulu-Natal market.

The province was its second-largest market after Gauteng at almost 2.1-million tonnes a year. The introduction of the International Trade Administration Commission of South Africa’s imposed tariffs had significantly reduced imported volumes, resulting in higher demand for locally produced cement.