Sephaku grows revenue, net profit in half-year to end September

JSE-listed building and construction materials company Sephaku Holdings (SepHold) has reported an increase in group consolidated revenue to R613.8-million for the six months to September 30, up from R626.6-million in the interim period to end September 2023.

The company increased its net profit after tax to R32.6-million, up from net profit after tax of R19.7-million in the prior financial year's interim period.

The company increased basic earnings a share to 13.91c, up from 7.74c in the comparable half-year period to end September 2023. Similarly, headline earnings a share increased to 13.78c, up from 7.54c in the prior financial year's interim period.

Sephaku also increased net asset value a share to 538.66c a share, up from 476.56c a share in the comparable prior year interim period.

The company declared no dividends during the six months ended September 30, 2024.

The South African economy remained subdued during the first six months of the financial year, contracting marginally during the first quarter of the 2024 calendar year and growing by only 0.4% during the second quarter, says Sephaku Holdings CEO Kenneth Capes.

Positive trends emerged during the period as inflation declined, the rand strengthened against the dollar, electricity supply stabilised and the first of the anticipated interest rate reductions was announced in September.

However, low levels of infrastructure investment continued to weigh heavily on the construction sector and the related building and construction materials markets.

While the reduction in fuel prices provided relief to businesses and consumers, cost inflation did not moderate for other essential goods and services, such as electricity and food, he notes.

SepHold’s businesses, Métier and SepCem, experienced low sales volumes against this background, and continued to mitigate the effects of difficult market conditions with cost efficiencies and targeted sales strategies.

Both businesses capitalised on available opportunities in their markets, Capes says.

Métier experienced a significant decline in overall sales volumes but countered the impact on revenue with strong cost controls. Price increases implemented in January 2024 contributed to earnings before interest, taxes, depreciation and amortisation (Ebitda) growth.

However, an unforeseen maintenance cost adversely impacted net profit after tax, he adds.

Métier continued to invest in growth opportunities, expanding its operations to accommodate new contracts to supply concrete to two large infrastructure development projects in KwaZulu-Natal and growing its presence in the Western Cape, Capes highlights.

Additionally, SepCem delivered a sound financial performance, achieving modest growth in sales volumes and supporting revenue growth with nominal price increases.

Ebitda normalised following the anomalous performance during the prior year when coal and fly ash supply constraints and an extended kiln stoppage depleted inventory.

As a result, SepCem’s 36% equity-accounted profit in the Group’s interim profit and loss statement turned around to a R1.5-million profit for the period under review from a R14-million loss, he says.