News / Industry

Monday 14 - 18 August 2017

CORPORATE NEWS

Construction group Aveng’s share price fell 7.3% to R3.57 on Friday after it said it was postponing the release of its results. Aveng’s results for the year to end-June‚ which were scheduled to be released on Tuesday‚ will now appear only on September 28. The group said it needed the delay because it was renegotiating its debt facilities with banks after the settlement it was awarded for its Queensland Curtis Liquefied Natural Gas (QCLNG) project was lower than expected.

 

The share price of African Oxygen (Afrox) jumped 10.6% to R20.50 on Friday morning after it said its coming results would show interim earnings grew by up to a third. Afrox said in a trading statement it expected to report on September 8 its basic and HEPS for the six months to end-June would be within the range of 20% to 33% higher. The increase was largely due to an increase in volumes in most areas of the business‚ improved operational efficiencies together with an increase in interest earned.

 

Standard Bank managed to squeeze higher interim profit out of slightly lower revenue in the 6 months to end-June. The group’s overall revenue declined 0.2% to R61.4bn‚ with the contribution from its corporate and investment banking arm falling 1.6% to R17.4bn while personal and business banking revenue grew 0.7% to R33.4bn. Attributable profit grew 14% to R12.3bn‚ thanks to the personal and business banking division growing profit 11.4% to R6.1bn and the corporate and investment banking arm growing profit 9.8% to R5.3bn.

 

Gold Fields declared an interim dividend of 40c/share despite a sharp drop in interim profit‚ with the South Deep mine’s difficulties in the period a blot on the company’s overall operating performance. Gold Fields recorded net profit of USD58.6m for the six months to end-June compared with net profit of USD121m a year earlier. Revenue was little changed at USD1.33bn‚ while operating profit fell to USD627m from USD639m.

 

BHP Billiton said on Thursday that it had approved a USD2.46bn capital expenditure programme for the Spence open-cut copper mine in Northern Chile‚ expecting this to extend the mine’s life by more than 50 years. At mid-case consensus metal prices‚ the mine would expect an internal rate of return of 16%‚ and a payback period of 4.5 years from first production‚ says the group.

 

Sibanye Gold warned on Thursday it would report an interim loss of at least R4.8bn‚ with a hefty R2.8bn impairment against two gold mines it plans to stop. Sibanye has told the market it is looking at retrenching up to 10‚000 people‚ including about 2‚400 contractors‚ with the closure of its three Cooke shafts as well as its Beatrix West mine‚ all of which are unprofitable and have come under intense management scrutiny to make them viable operations.

 

RCL Foods expects FY headline profit to drop by up to 41.6%‚ weighed down by once-off items‚ which include restructuring costs relating to the company’s decision to reduce chicken volumes. Earlier in 2017‚ RCL downsized its chicken business unit in a move that laid off about 1‚350 workers at its Hammarsdale plant‚ in KwaZulu-Natal. The food producer said on Thursday that headline earnings per share would be between 57.5c and 67.5c‚ down from 98.5c a year-ago.

 

Exxaro more than tripled its interim dividend to R3 from 90c‚ its results for the 6 months to end-June released on Thursday morning showed. Interim revenue grew 10% to R10.7bn and after-tax profit more than doubled to R2.7bn from R1.3bn. The group said it benefited from higher international coal prices and increased demand from Eskom’s Medupi power station for coal from its Grootegeluk mine.

 

An improved performance in Metair’s automotive components vertical division helped it double its headline profit in the 6 months to end-June‚ the company said on Thursday. The automotive components vertical business battled high costs related to new model launches in the year-earlier period.  The HEPS rose 111% to 114c from 54c in the corresponding period last year.

 

PPC’s share price jumped 14% to R3.99 on Thursday morning after it issued an upbeat operational update for the June quarter‚ the first of its financial year. The cement maker said sales volumes in its home market declined slightly‚ but outside SA it had achieved double-digit growth.

 

City Lodge declared a dividend of R2.28 per share for the year ended-June‚ representing a final-year dividend decrease of 3.3% from the previous period. Its share price fell 1.74% to R138.54 in mid-afternoon trade after the group reported that normalized headline earnings decreased 3.1% to R362.2m. Average occupancy during the period was 63%‚ from 66% in 2016.

 

Famous Brands’ share price fell 9.7% to R112 on Wednesday morning after it issued a downbeat performance update. The statement indicated that the GBP120m acquisition of UK chain Gourmet Burger Kitchen in 2016 was not going as well as hoped‚ and the JSE-listed group was scaling back its UK expansion plans.

 

Tough economic climate has forced South Africans to view home improvements as unaffordable, Italtile complained in its results released on Wednesday morning. The group reported 4% growth to R3.7bn in revenue for the year to end-June and 3% growth in aftertax profit to R880m.

 

Imperial has secured full ownership of UK-based car dealer Pentagon in a GBP28m deal. Imperial said on Tuesday that the transaction would expand its international retail footprint into the passenger and light commercial vehicle market in the UK.

 

Northam Platinum will report a deeper annual loss compared with the previous year despite both its operations posting record operating profit in a difficult period for the company. In a trading update‚ Northam warned investors that its loss and headline loss per share for the year to end-June would be in the range of 167c-196c.

 

Grindrod’s share price rose 6.4% to R11.88 on Tuesday after saying the interim loss it expected to report in its coming results would be less than a tenth of the matching periods.  Grindrod said that it expected to report‚ on August 23‚ that its loss for the six months to end-June narrowed to between R77m and R97m from the matching period’s R1.12bn. This would translate into its interim headline loss per share narrowing by up to 69% from the matching period’s 50.8c‚ and its basic loss per share narrowing by up to 93% from 149.2c.

 

Long4Life‚ an investment firm founded by businessman and founder of Bidvest‚ Brian Joffe‚ said in a cautionary statement that it has entered into negotiations for what could be its third acquisition.  The investment vehicle‚ which is currently facing resistance from minority shareholders in its proposed acquisition of sports retailer Holdsport‚ saw its share price add 0.49% to R6.15 at 11.01am. The discussions were unrelated to those of Holdsport‚ Long4Life.

 

Group Five expects its FY headline loss to be higher than initially indicated. In an updated trading statement on Monday‚ the construction and engineering group said its headline loss per share in the year to June would be between R8 and R8.70‚ from a previous guidance of R5.90. The loss had increased from the previous estimate mainly as a result of a “more conservative approach adopted on the tax treatment of a transaction”‚ the company said in a statement.

 

Eastplats said on Monday it was gearing up to make operational decisions in the second half of 2017‚ after having cut its interim losses for the six months to end-June to USD4.7m from a previous USD30.5m. Eastplats‚ which is listed on the Toronto Stock Exchange and the JSE‚ had reported working capital of USD27.5m for the year to end-December. As of June 30‚ this stood at USD26.3m‚ the company said.

 

Safripol helped the group’s revenue grow 23% to R20bn for the year to end-June‚ it reported on Monday. Safripol was included as part of KAP from January 1‚ so it only contributed for half of the financial year. KAP raised its dividend by 17% to 21c in tandem with a 17% growth in after-tax profit to R1.4bn. Its share price rose 2.8% to R8.50 after releasing its results.

 

Bell Equipment’s share price jumped 9% on Monday‚ after it said its coming interim results statement would show that earnings improved by up to 70%. Its share was trading at R8.40 on Monday morning. Bell said in a trading statement that it expected to report on August 31 that its basic and HEPS for the six months to end-June‚ would improve to at least 114c from the matching period’s 67c.

  

ECONOMIC NEWS

 

Wholesale trade sales increased by 1.1% in the Q2 of 2017 compared with the same period a year ago‚ Statistics SA data showed on Thursday. The main contributors to the increase were dealers in food‚ beverages and tobacco‚ as well as solid‚ liquid and gaseous fuels and related products.

 

South Africans’ bad debts have improved compared with a year ago‚ but the picture for the year to date is mixed. Statistics SA reported on Thursday that the number of civil summonses issued for debt was down 16.7% in June from a year earlier‚ at 48‚169. The number of civil judgments for debt has also fallen from a year earlier — down 10.5% to 21‚954 in June 2017. However‚ the amount of money involved in those judgments is higher‚ up 1.6% at R350.6m.

 

June’s retail sales grew 2.9% from the same month in 2016‚ taking its growth for the second quarter to 2.2%‚ Statistics SA reported on Wednesday. SA consumers are spending more than economists thought‚ with a consensus from a poll done by Trading Economics expecting the June figure to be about 2.2%. The monthly rise from May was 0.2% against an expected monthly contraction of 0.3%.

 

Despite weakening production in the manufacturing sector‚ companies continue to invest in plant and equipment‚ research and development‚ and human capital‚ according to the Manufacturing Circle. However‚ investment growth slowed‚ the industry group’s investment tracker index for the second quarter showed on Wednesday. It dropped five points to 58‚ from 63 in the Q1.

 

Moody’s did not publish a ratings decision on SA last week as scheduled‚ but the credit rating agency has warned of the possible issues that could lead to another downgrade. In June‚ Moody’s cut SA’s debt by a single notch to Baa3‚ one level above sub-investment‚ with a negative outlook‚ after the Cabinet reshuffle‚ during which President Jacob Zuma fired former finance minister Pravin Gordhan and his deputy Mcebisi Jonas.  Last week‚ Moody’s said there have been no major events to warrant a ratings review for SA.

 

Business debt stress continued to worsen in the second quarter of 2017‚ an index showed on Wednesday. The Experian business debt index improved slightly but remained below the neutral zero level — rising to minus 0.22 from minus 0.32. The index is an indicator of the health of businesses based on their debt settlement. The zero line distinguishes between improving and deteriorating business debt-stress levels.

 

South Africans working abroad express strong objections to a proposal by the Treasury that they be taxed on their foreign earnings in SA if they are not tax resident in another country.  SARS group executive for legal policy and research Franz Tomasek told MPs on Tuesday that about 8 000 people had protested on the SARS Facebook page against the measure which will see the repeal of the foreign employment income tax exemption for those who work outside the country for fewer than 183 days.

 

SA’s bulk export volumes rose by 34.5% y/y in July to 15.6m tons says the Transnet National Ports Authority. This brought the increase for the first seven months of 2017 to 8.7%‚ showing that mining and agricultural bulk exports are boosting the South African economy. In the Q1 the agriculture and mining sectors were the only ones out of the ten major economic sectors that contributed to improvements in the Q1.

 

SOURCE: BD PRO

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