News / Industry

Monday 28 August - 01 September 2017

CORPORATE NEWS

Mr Price said on Friday it was making headway in its attempt to regain market share lost by its clothing units‚ MRP Apparel and Milady’s. In a trading update for the first four months of its 2018 financial year‚ the company said that total retail sales were up 6.2% in the 18 weeks to August 5. For April‚ May and June‚ MRP Apparel and Milady’s reported sales growth of 10.1% at current prices — which Mr Price pointed out was far ahead of the 4.8% growth that Statistics SA reported for the retail sector.

 

Real estate investment trust (Reit) Hyprop increased its FY dividend to end-June by 12.1%‚ the group said on Friday. HEPS for the 2017 period rose to 644.4c from 574.3c. Headline earnings amounted to R1.594bn from R1.395bn. The group disposed of noncore properties worth R867m in the year. Revenue and distributable earnings from investment property increased by 7.1% and 6.1%‚ respectively.

 

Trans Hex said on Friday it was looking to potentially retrench 332 employees at its struggling Baken mine‚ which is to be put on care and maintenance from November. The alluvial diamond miner said it began consultation process with NUM about the potential job losses at the mine.

 

Electronics company Jasco on Friday warned of a sharp fall in earnings for the FY to end-June 2017. EPS would be 38%-48% lower than in 2016‚ and HEPS would drop 56%-66%‚ partly as a result of an increase in the number of shares in issue. Jasco said revenue declined by between 1% and 5%‚ but operating profit was steady from a year earlier.

 

Embattled retail group Steinhoff said on Thursday that group sales had increased 48% to EUR14.9bn for the nine months to end-June‚ with organic revenue‚ excluding acquisitions‚ increasing 8%. This was led by good growth in the European and African regions‚ with like-for-like sales in SA growing 7.4%. The group generated 52% of sales in Europe‚ 27% in Africa‚ 15% in the US and 6% in Australasia.

 

Insurer Santam’s underwriting margin in the six months to end-June was hit by claims from the fierce Cape storm and devastating Knysna fire in June. Gross written premium growth was 14%‚ and 12% for conventional insurance‚ but a 4.2% underwriting margin on conventional insurance was down from 6.4% a year earlier and at the lower end of the 4%-8% range the group targets. After-tax profit rose 6% to R808m. EPS grew 8% to 683c‚ but HEPS fell 6%. Santam declared an interim dividend of 336c.

 

Discovery Holdings said on Thursday it expected both HEPS and EPS for the year to end-June to increase between 18% and 22%. HEPS would come in at 674c-697c and EPS at 667c-699c. It said the main reason for the increase was that the previous year included one-off costs related to a UK acquisition and rebranding. As a result‚ the increase in normalised HEPS would be a more modest 5%-8%‚ to 710c-730c‚ based on an 8%-12% increase in normalised operating profit to R6.9bn-R7.2bn. Discovery expects to release 2017 results on or about September 18.

 

Tobacco firm BAT said on Thursday it had overhauled its organisational and management structures following the successful acquisition of Reynolds America. The company had now created three regions to encompass activities‚ with sub-Saharan Africa paired with the Americas. The new structure would enable better‚ integrated resource allocation and decision making across geographies and categories.

 

Bell Equipment said on Thursday HEPS rose 78% in the six months to June‚ with the company declaring an interim dividend of 20c. Net profit after tax increased 86% to R119.6m‚ with HEPS increasing to 119c. Outlook for growth from our mining sector and commodity markets in SA‚ Australia and Russia was positive‚ with a slow recovery evident. The UK and USA remained key markets with relatively stable sales given the significant political changes and resultant uncertainty over the period.

 

Chrome and platinum ore miner Tharisa said on Thursday that it would commission a 1MW furnace to produce platinum-rich metals on a pilot scale. The alloy production by subsidiary Arxo Metals would improve Tharisa’s beneficiation capacity. The furnace is scheduled to be commissioned at the end of September 2017.

 

Redefine International reported on Thursday it had completed the sale of its Sytner BMW showroom in High Wycombe for £26.1m to a UK pension fund. The sale price reflects a net initial yield of 5.0% and a premium of 5.8% to the February 28 2017 book value. The property was acquired in March 2016.

 

Sibanye — which has changed its name to Sibanye Stillwater — swung deep into the red in the H1 to end-June‚ a result that had been widely flagged ahead of its results presentation on Wednesday. Group operating profit of R3.2bn was affected by a lower gold price and reduced gold production. Operating profit from its gold operations was R2.4bn — less than half the R5.3bn reported a year earlier. The headline loss was R2.2bn and the normalised loss R1bn. The company did not declare a dividend.

 

Property giant Growthpoint increased its dividend by a marginally higher than expected 6.5%‚ to 195.8c‚ for the year ended June‚ the group said on Wednesday. For 2017‚ gross revenue increased by 9.8%. Headline and diluted earnings amounted to R5bn from R3.8bn in 2016. Distributable income growth grew 10.4% to R5.6bn. Retail sales grew by 3% and trading density by 2% at V&A Waterfront.

 

Mining group Assore reported on Wednesday it had doubled its FY headline earnings‚ benefiting from higher commodity prices. Headline earnings jumped about 200% from R1.7bn to a record R5.2bn in the year to June‚ as prices of iron and manganese ores rose due to strong demand. The growth in the production of crude steel in China‚ which manufactures more than half of the crude steel produced globally‚ drove commodity prices higher during the year. The company declared a final dividend of R8.

 

Telkom on Wednesday gave a clearest signal yet that the government was looking to sell its 39% interest in the fixed-line and mobile operator when it advised investors to exercise caution in dealing with its shares. The government is weighing its options to raise funds to bail out cash-strapped state-owned airline SAA.

 

Torre Industries on Wednesday reported a 30% drop in normalised HEPS to 15c in the year to end-June as a result of R456m in impairments. Group revenue was stable at R1.5bn, while net operating loss widened to R406m from R22m. The company said it was positioned to benefit from any improvement in the local economy‚ after completing the restructuring of its business‚ which included the sale of 55% interest in the Kanu Group.

 

Aspen Pharmacare said on Wednesday its HEPS and EPS were expected to improve for the year ended June 30 2017 following the devaluation of its Venezuelan business in the previous year. The company said the boost in EPS was as a result of the once-off negative effect in the comparative period arising from the devaluation of Aspen’s Venezuelan business and higher intangible asset impairments which were offset by capital profits realised from the disposal of non-core businesses and products.

 

Building material retailer Cashbuild on Tuesday reported slower earnings growth in the year to end-June‚ reflecting a tough trading environment. It reported an 8% increase in headline earnings to R464.4m. In the year to end-June 2016‚ headline earnings were up 23%. Group revenue for review period was up 12% to R9.7bn from R9.7bn‚ with the bulk of the contribution coming from P&L Hardware‚ which Cashbuild acquired in 2016. Cashbuild declared a final dividend of R3.90.

 

Industrial group Bidvest reported on Monday it eked out 4.6% growth in FY trading profit to R6bn‚ despite what it described as tough trading conditions. Group revenue rose 4% to R71bn in the year to June. HEPS rose 5% to R11.08 and the final dividend was up 13.8% to R2.64.

 

Transport and logistics group Super Group on Monday reported a 3.9% drop in HEPS to 285c in the year to end June. It described the results as solid‚ despite many challenging and competitive trading conditions being experienced by most of the group's operations‚ locally and abroad. Group revenue increased 15.1% to R29.9bn and ebita was up by 10.1% to R2.3bn. Operating profit rose 8.4% to R2.1bn. Operating cash flow increased by 17.3% for the year to R3.1bn.

 

ECONOMIC NEWS

 

The Absa purchasing managers index (PMI) picked up slightly in August, but still showed a sector under pressure. The index rose to 44 index points in August‚ after slumping to 42.9 in July — the lowest level since 2009. The index has struggled to climb above the neutral 50-point mark after falling below it in June. The improvement was broad based‚ with four of the five main subcomponents increasing.

 

Producer inflation slowed further in July‚ following a surprisingly sharp slowdown in June‚ thanks to food and fuel price dynamics. PPI for final manufactured goods rose 3.6% in July from a year earlier‚ down from 4% in June. That was slightly higher than expectations.  The main contributors to the annual rate were food products‚ beverages and tobacco products; wood and paper products; and coke‚ petroleum‚ chemical‚ rubber and plastic products.

 

SA recorded a sixth consecutive trade surplus in July‚ following a growth in exports and recovery in commodity prices, SARS said on Thursday. SARS recorded an R8.99bn trade surplus for July 2017‚ attributable to exports of R93.1bn and imports of R84.1bn. Novare economist Tumisho Grater said lower import growth coupled with an increase in exports had been behind the positive trend with a trade surplus recorded in the past five months.

 

SA’s private sector credit growth moderated more than expected in July‚ reinforcing the perception of low business and consumer confidence, Reserve Bank data released on Wednesday showed. Growth in the extension of credit to the private sector moderated to an annualised 5.71% in July from 6.16% in June. Growth in M3 money supply‚ the Bank’s broadest measure of how much money is circulating in the economy‚ rose 6.81% from 5.96%.

 

South African farmers would harvest 16.4m tons of maize in 2017‚ marking the largest crop on record‚ the CEC said on Tuesday. The bumper harvest represented a 2.78% growth on the figures it provided in July and was more than double the crop that was produced in 2016. White maize output was estimated at 9.65m tons in 2017‚ up 1.54% on July’s estimate‚ while that of the yellow variety was forecast to rise 4.61% to 6.76m tons. The production estimate for sunflower was pegged at 870‚095 tons‚ representing an increase of 6%‚ but that of soybean declined 1.79% to 1.34m tons.

 

SA’s steel production recovered by 7.6% in July to 493‚000 tons from June’s 458‚000 tons‚ but this still left steel output down 6.3% from a year ago‚ the World Steel Association reported on Monday. In June steel production plunged by 15.9% y/y‚ but this seemed to have been a once-off due to production problems at steelmaker ArcelorMittal South Africa’s Vanderbijlpark Works. Global steel production grew by an annual 6.3% in July to 143.2m tons with China’s steel production surging by 10.3% to 74m tons.

 

FINANCIAL NEWS

 

Treasury is increasing the inflation-linked bonds (ILB) on offer at its weekly Friday auction from this week. It said in a Sens statement on Monday that ILB auctions had underperformed this year‚ with higher than expected yields meaning the auctions brought in less cash than expected. The issue is not demand for the bonds‚ but the cash generated from them.

SOURCE: BD PRO

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