News / Industry

Monday 4 - 08 September 2017

BUSINESS NEWS

GDP grew 2.5% in the Q2 from the Q1, lifting SA out of an economic recession. The biggest boost came in part from the agriculture‚ forestry and fishing sector — which increased by 33.6% and contributed 0.7 percentage points to GDP growth. SA’s agriculture sector is recovering from the effects of a long and severe drought‚ which has abated in most parts of the country — but continues to ravage the Cape. The fast Q2 growth follows 22.2% growth for the sector in the Q1‚ which came after two full years — eight consecutive quarters — of unabated contraction. Mining and quarrying increased by 3.9%‚ contributing 0.3 percentage points. The economy contracted 0.7% in the Q1 of 2017‚ and shrank 0.3% in the Q4 of 2016‚ putting SA into recession for the first time since the 2008-09 global financial crisis.

The Mining sector picked up slightly in July‚ but the numbers were lower than expected, after a slight slump in June, said a report on Thursday. The report revealed that mining production increased 0.9% from a year earlier in July‚ after a 0.8% y/y fall in June. M/m‚ mining production contracted by 0.4% in July. Seasonally adjusted mining production increased by 0.1% in the three months ended July compared with the previous three months.

The Manufacturing sector took a knock in July‚ with production declining more than expected, according to the July Purchasing Managers’ Index. The index showed that manufacturing production shrank 1.4% from a year earlier. It suggested that the industry was doing poorly‚ with the index continuing to fall well below the neutral 50 mark.

The Reserve Bank said on Thursday SA’s gold and foreign exchange reserves got a boost from the higher gold price and the weaker dollar in August. It said gold reserves were USD152m higher at USD5.262bn‚ and foreign exchange reserves rose USD13m to USD39.132bn. Gross reserves were USD175m higher at USD46.921bn, said the bank. This followed a 606m fall to USD46.746bn in July.

Business confidence declined to its lowest level since the mid-1980s‚ the South African Chamber of Commerce and Industry (Sacci) said on Wednesday.  The business confidence index fell 5.7 index points to 89.6 in August‚ from 95.3 in July — the largest m/m decrease since November 2015. It was 3.3 points lower than in August 2016. Sacci said SA’s economic performance could be doing better and is suboptimal at a time when the country could be better positioned to fully utilise this opportunity.

Standard Bank’s PMI dipped back into contraction territory in August‚ “signalling broad stagnation in the business climate”‚ said the bank on Tuesday. It said the index fell to 49.8 in August. Readings for both new business and output‚ the two biggest components of the index‚ declined. It said the fall in new business was the sharpest since April 2016‚ and the second decline in three months.

Agricultural Business Chamber reported on Monday that Agribusiness confidence took a knock in Q3 of 2017 as the unrelenting drought in the Western Cape and low demand for maize exports weighed on sentiment. The chamber said data showed that the agribusiness confidence index declined by two index points during the review period to 54. It said despite the decline‚ the index remains in expansionary territory above 50.

Results of the StatsSA domestic travel survey for 2016 showed on Monday that while total expenditure on domestic travel held stable at R87bn in 2015 and 2016‚ there has been a considerable decline since 2014‚ when South Africans spent R110bn on local travel. The survey showed that there was a marked decline in the number of day trips South Africans undertook in 2016‚ decreasing from 44.3m in 2015 to 39.4m in 2016.

 

CORPORATE NEWS

Sanlam on Thursday reported a drop in its headline profit as the stronger rand took shine off some of the underlying businesses. The financial services group's normalised headline earnings were up 5% to R4.5bn as a result of a 1% increase in the net result from financial services and a 55% rise in net investment return earned on the capital portfolio. It said the stronger currency added to what it described as a tough operating environment in SA.

African Oxygen (Afrox) reported on Friday it had recorded a 22% rise in H1 HEPS to 93.3c‚ which was at the lower end of its recent guidance. The improvement in earnings was as a result of increased volumes and operational efficiencies. Afrox makes the bulk of its income in SA‚ making it susceptible to the performance of the local economy. Group revenue was up 6.8% to R2.79bn in the six months to end-June as the company increased volumes in certain sectors of the business and net profit increased to R296m‚ from R244m.

South32 reported on Thursday that its USD65m Klipspruit Extension Project, would unlock a huge coal resource that can assist with the as-yet unresolved long-term supply needed for Kusile power station. The miner said the group’s investment in Klipspruit Extension will unlock a huge resource of about 600-million tonnes. This is intended to be an export coal mine but there is flexibility to sell to Kusile, it said.

Spur on Thursday reported higher sales for the year to end-June‚ but lower profits and a smaller dividend‚ as difficult economic conditions took their toll. Restaurant sales from continuing operations were up 4.2% across the group‚ at R7.2bn. That figure covers total sales at all franchises‚ and does not reflect the revenue Spur earned. Revenue growth from continuing operations was 2.4%‚ to R648m.

African Rainbow Mineral reported on Thursday that it swung into a substantial profit for its 2017 financial year‚ prompting it to pay its highest ever dividend‚ of R6.50/share. It reported a profit of R1.4bn for the year to end-June compared with a R757m loss the year before‚ with its 50% share in the Assmang iron and manganese business contributing handsomely to the company’s results.

FirstRand said on Thursday normalised earnings‚ as well as basic and diluted normalised EPS‚ rose 7% for the year to end-June. It said it increased the ordinary dividend for the year 13% to 255c. Basic and diluted HEPS rose 6% to 423.7c. Return on equity softened to 23.4% from 24%.

Royal Bafokeng Platinum reported on Wednesday that it would issue shares worth up to R1.4bn to buy the concentrator‚ tailings facilities and other surface infrastructure‚ as well as issue share to the owners of the newly built but financially constrained Maseve mining operation. It said the transaction would occur in two stages‚ with the surface infrastructure the first target‚ and ownership of the brand new but loss-making mine following closely behind. RBPlat will buy the surface infrastructure for the rand equivalent of $58m and the full ownership of the jointly held Maseve company for $12m.

Italtile said on Wednesday its deal to acquire Ceramic Industries would take effect on October 2‚ after the companies receive regulatory clearance. The retailer announced that it would acquire 75% of Ceramic’s shares for R3.75bn‚ which would be settled in cash and shares, in early in 2016. It said it was satisfied with the one condition attached to the deal which states that its employees were not to receive or gain access to any information of Ceramic relating to third party customers.

Insurer MMI reported on Wednesday that it had maintained its annual dividend for the year to end-June 2017‚ despite a tough trading environment taking its toll on earnings and new business. It said diluted core HEPS were unchanged‚ but diluted HEPS fell 11%. New business fell 23% to R547m‚ embedded value was off 1% at R42.5bn and the return on embedded value fell sharply‚ to 4.7% from 12.8% a year ago.

Capitec said on Wednesday it expected its H1 headline profit to August to rise by up to 18% ‚ from a year-earlier period. The lender said it expected HEPS to rise to between R17.45 and R17.90. The bank fared a lot better than its larger peers on the JSE‚ with its share price gaining 29% so far this year.

Stor-Age reported on Tuesday that it would shortly enter the UK self-storage market with an estimated R1.3bn acquisition of the region’s sixth largest operator‚ Storage King. The transaction is expected to be concluded next month, said Stor-Age. It said it would settle the £77.13m purchase price through a mix of equity and debt. Stor-Age said it has negotiated for a re-financed £25m debt facility in Storage King‚ which will effectively see Stor-Age pay a purchase price of about £53m for 97.3% of the issued shares‚ with the balance of the shares being acquired by management of Storage King on the same terms.

WBHO reported a 2.5% drop in its FY HEPS to R13.09 on Tuesday. It said it was affected by a once-off expense linked to a deal with the government to transform the sector. Stripping out this deal‚ HEPS in the year to June would have been up about 15%‚ said the company. The deal involved the company having to pay R21.5m annually to Tirisano Trust‚ a BEEE‚ over a 12-year period.

Fairvest said on Tuesday it achieved 10.04% increase in FY distribution to 18.33c‚ which was at the top end of its previous guidance. It said net profit from property operations was up 18.8% to R209.5m in the year to end-June. The total property portfolio increased 14.5% from R1.93bn to R2.20bn. The company said it expected to achieve distribution growth of between 9% and 10% in the 2018 financial year.

De Beers reported a large decline in the seventh sale of rough diamonds for the year on Tuesday‚ with provisional revenue of USD505m compared with USD639m in the same period a year earlier. Rough diamond sales were somewhat lower in the seventh cycle of the year‚ with some midstream demand having already been brought forward into Cycle 6 due to Diwali being earlier than normal in 2017.

Rhodes Food Group plunged more than 10% on Tuesday‚ after the company reported international turnover had declined 21.89% in the 10 months to end-July. HEPS were expected to be between 25% and 35% lower. Group turnover rose 9.9% during the period‚ and regional turnover by 21.1%.

Adcorp on Tuesday named former MMI executive Innocent Dutiro to succeed Richard Pike as its new CEO. Dutiro headed the African and Asian division of the insurance group formed in 2010 from the merger of Momentum and Metropolitan. Pike and former COO Nelis Swart agreed to stand down from their roles with immediate effect at the beginning of August‚ following a board reshuffle.

DRDGold on Monday declared a 5c/share final dividend despite experiencing a difficult year‚ as it grappled with rehabilitation of an old site and moved its reclamation operations closer to its Ergo processing plant. The company reported profit of R13.7m for the year to end-June compared with profit of R61.9m a year earlier.

Texton Property Fund on Monday reported a 10% rise in net property income to R440.8m in the year to end-June from a year ago. But the total dividend dropped 0.80% to 102.80c per share‚ it said. The company said SA’s low economic growth and economic uncertainty in the UK would continue to create a challenging environment for the fund.

Datatec reported on Monday that its shares soared 8.2% to R60.88, nearing the stock’s one-year high, on news that shareholders could be in for a USD500m cash windfall. The company also attributed the rise to the completion of the Westcon-Comstor Synnex transaction.

AfriSam said on Monday it had submitted a revised merger proposal to PPC. The conditional partial offer‚ confirmed by PPC‚ appeared to affirm that AfriSam was the bidder in any merger process‚ with the backing of the African investment unit of Fairfax Financial Holdings. The revised merger proposal included a R4bn recapitalisation of AfriSam prior to any merger with PPC.

EOH said on Monday it expected EPS and HEPS to rise 10%-20% for the year to July 31. It said its revenue rose by 21% from a year earlier. The company's shares edged up 0.32% to R110.45.

 

SOURCE: BD PRO

Banner

More insight & research

This site uses cookies to store information on your computer. By using our site you accept the terms of our cookies policy. Accept