SepHold releases subsidiary results and operation update
Sephaku Holdings Limited has released interim financial results for Dangote Cement SA (Pty) Ltd ("Sephaku Cement") and first quarter operational update for Metier Mixed Concrete (Pty) Ltd ("Metier") , for the period ended 30 June 2018.
Salient points: Sephaku Cement's
- Sales revenue of R1,164 million compared to R1,105 million
- EBITDA margin of 22% (R256 million) compared to 18% (R197 million)
- EBIT margin of 15% (R170million) compared to 10% (R112 million)
- Net profit of R45 million compared to R16 million net loss
Pricing and sales volumes
Sephaku Cement?s interim revenue increased by 5,3% to R1,164 million (2017: R1,105 million) mainly due to the average price increase per tonne of 3% and 5% implemented in August 2017 and February 2018 respectively. The higher proportion of the lower priced bulk cement to total sales volume resulted in a slightly lower than targeted increase in revenue. Nonetheless, the price increases have sustained in most markets except Gauteng where competition continues to be intense.
The second quarter sales volumes were 5% higher than first quarter due to the seasonality of demand. The first quarter volumes were 7% higher than the comparative period due to excessive rainfall resulting in weak demand and the inability to produce cement by a major competitor in 2017. Sephaku Cement's second quarter sales volumes were 5% lower than the comparative quarter due to lower demand resulting in a nominal interim increase of 0,5% to 30 June 2018.
Sephaku Cement's cost saving efforts had a positive impact on profitability by contributing to the 30% increase in interim EBITDA of R256 million (22%) compared to R197 million (18%) in 2017. The operating and net profits achieved were R170 million (2017: R112 million) and R45 million (2017: loss R16 million) respectively.
As at the end of June 2018, the project loan balance was R1,75 billion following the payment of the tenth quarterly instalment in May 2018. The next instalment in August 2018 is expected to include an additional amount due to the significantly improved cash flows. Sephaku Cement?s ending cash and cash equivalents balance was R452 million as at 30 June 2018.
Sephaku Cement has a December year-end as a subsidiary of Dangote Cement PLC.
The first quarter mixed concrete prices were static year on year for the three months ended 30 June 2018 as competition remained high. Metier had a 15% increase in first quarter sales volumes year on year, albeit from a weak comparative base, due to the expansion into new demand nodes in Gauteng and Tshwane.