Sephaku Cement FY profit declines 16%

Nigeria-backed cement producer Sephaku Cement has posted a 16% drop in its full-year profit, despite revenue increasing by 3.7% to R2.37-billion in 2017.

The company turned a profit of R73.9-million in the second half of the year, compared with a loss of R16.1-million in the first half, resulting in full-year profit of R58.7-million. This was a 16% decrease on the previous year’s profit of R68.9-million.

The recovery in the final six months of the year was aided by increased demand and improvements in operational efficiencies, the associate company of JSE-listed Sephaku Holdings said in a statement on Thursday.

Sephaku Cement achieved an earnings before interest, taxes, depreciation and amortisation (Ebitda) margin of 23% in the third quarter and 25% in the fourth quarter. The Ebitda for the full year was 21.3%, compared with 23.1% in 2016.

The cement producer explained that the previous year’s Ebitda and net profit included once-off income from the closure agreement with Chinese engineering company Sinoma on the final handover of the plants of R138-million.

Sephaku Cement stated that the South African economy was largely subdued in 2017 and that the cement industry similarly demonstrated only a modest improvement in pricing and customer mix stability. The estimated industry sales volumes, including imports for 2017, were 12.9-million tonnes, representing a decline of 0.8% from the 13-million tonnes in the previous year.

The company said, however, that the enhanced business sentiment owing to perceived political stability was expected to increase investment into all major industries, although the economy was likely to remain under pressure for the next 12 to 18 months.

The forecasts have provided an improved macroeconomic landscape for the cyclical building materials industry.