News / Industry

Monday 30 October - 03 November 2017

 

CORPORATE NEWS

Lonmin announced on Friday that it was delaying publishing its results for the year to end-September over the concern that the book value of its assets has fallen under the level agreed with lenders. The miner is scheduled to release its results on November 13‚ but said its auditors required additional time to assess the impairments of its assets. A new date will be announced in due course.

 

US motor company Ford said on Friday it would spend a further R3bn on its SA manufacturing operations. It said the investment will be used to expand production capacity of the Ford Ranger bakkie and introduce a new off-road variant‚ the Raptor. The new cash injection would take spending at Ford SA to nearly R10bn since the current Ranger was launched in 2011. Upgrades since then have included the introduction of the upmarket Everest sports-utility vehicle.

 

TFG said on Thursday it grew revenue 9% to R13.97bn but after-tax profit remained flat at R1.04bn for the six months to end-September. It declared an interim dividend of R3.25. The retailer had ended the reporting period with 3,809 outlets spread over 32 countries. It said its second-half performance was heavily dependent on Christmas trading. Total retail turnover growth for the first five weeks of the second half of its financial year was at similar levels to the first half.

 

Truworths' share price fell 5% to R73.22 on Thursday morning after it said retail sales had declined 3% to R5.5bn during the first 17 weeks of its financial year compared with the matching period in 2016. The clothing chain said this was partly because it was due to report in weeks‚ and the decline would have been only 2% if the previous financial year had not had an extra week. Truworths said half of its total sales were “account” and half were cash. Both declined by 3%.

 

Afrimat on Thursday reported a rare slowdown in its H1 earnings growth. It said it was affected by the weaker macroeconomic environment in SA. HEPS rose just 7.4% to 102.2c in the H1 to August‚ from the year-earlier period. Revenue was up 2.7% to R1.2bn‚ with the aggregates and industrial minerals segment contributing 69.2% of the total and concrete-based products 28.3%.

 

Vandalism‚ community unrest and “government administrative procedures” were just some of the woes civil engineering group Esor listed in its interim results released on Thursday. Esor’s revenue for the H1 to end-August declined 17% to R553m and its after-tax profit of R2m was nearly a quarter of the matching period’s R7.5m. The group said its order book at the end of the reporting period stood at R1.41bn‚ marginally higher than the previous year’s R1.4bn.

 

De Beers said on Thursdays it would close its opencast Victor mine in Canada early in 2019. This follows the closure and subsequent flooding of its unprofitable Snap Lake underground mine in Canada in 2015, and comes as De Beers gears up to close or sell its Voorspoed mine in SA.  

Naspers -owned OLX Group announced on Thursday that it took ownership of the online vehicle marketplace Auto Trader. The group said the pace of innovation in the vehicle buying and selling space was picking up and global consumer-facing technology platforms were entering it. This partnership would give the company the scale to lead this coming wave of innovation and disruption in SA.

 

Sibanye-Stillwater said on Wednesday nearly 7‚000 jobs had been cut at its Cooke operation and another 1‚640 were in danger at Beatrix West. It said about 1‚350 workers had elected to take voluntary separation packages‚ 2‚025 would be retrenched and 3‚601 contractors had been displaced, adding up to 6‚976 jobs lost. The decision to restructure was not taken lightly‚ but it was pleasing to note that the group had managed to ameliorate job losses through the consultation process.

 

Old Mutual said on Wednesday it would cut its 54% holding of Nedbank down to 19.9%. Reducing its Nedbank stake was part of the group’s strategy‚ announced in March 2016‚ to strip itself down to its South African-based core business‚ Old Mutual Limited. Old Mutual had previously said it intended keeping a strategic minority shareholding in its banking subsidiary‚ without stating the amount.

 

Aspen Pharmacare said on Wednesday it had completed the acquisition of the rights to AstraZeneca’s global anaesthetics portfolio. Aspen paid an initial USD410m to commercialise the portfolio‚ with a further USD110m paid on July 1 this year. Aspen would also make sales-related payments of up to USD250m within two years of the completion of the agreement. Aspen’s share price was up 1.94% at R326‚ following the announcement.

 

Alexander Forbes on Wednesday announced Nonkululeko Nyembezi-Heita as its new chairperson from January 1. She becomes the first woman to chair the board in the company’s 82 years of existence. Nyembezi-Heita is also the chairperson of JSE Limited and CEO of Dutch trading company Ichor Coal.

 

Implats said on Tuesday its share price rose 5.5% to R40.09‚ despite lowering its refined metal target because one of its furnaces would be out of production until December. It said it raised the amount of ore milled by 9.6% to 6.74m tons in the September quarter. But the amount of refined platinum it produced declined 6.6% to 341‚200oz from the matching quarter in 2016‚ due to planned maintenance of various furnaces.

 

Imperial said on Tuesday it was reviewing its relationship with auditing firm KPMG‚ which is under fire for the work it did for the controversial Gupta family and the SARS. It said it would await the outcome of the investigation by the Independent Regulatory Board for Auditors and the South African Institute of Chartered Accountants before deciding on the way forward.

 

Renergen said on Tuesday it would stop funding a hydro-electric project in Ivory Coast so that it could focus on its Tetra 4 project in SA. The natural gas developer's investment in the hydro-electric project to date was R12.5m‚ but it would have to invest another R20m to complete the studies. Renergen  can start building liquefiers next year and produce liquefied natural gas from early 2019 after Petroleum Agency of SA approved Tetra 4’s environmental impact assessment a month ago.

 

Delta Property Fund on Tuesday reported just a 1.02% rise in distribution to 46.40c in H1 to end-August from a year ago. Contractual rental income was up 3.3% to R782.24m‚ but property operating expenses dropped 0.7% to R205.26m. The like-for-like net property income was up 6.8% to R576.37m and vacancy rates for the period was up to 11.3% from 9.2%. Delta shares rose 1.22% to R7.44 in mid-morning trade.

 

AECI said on Monday it had acquired Much Asphalt for R2.27bn in cash to broaden and diversify its earnings stream. Much Asphalt relies heavily on the government for business through SEOs, including Sanral. AECI said it was looking at another potential acquisition‚ warning shareholders to exercise caution in dealing with its shares.

 

Shoprite’s share price fell 3.6% to R200 on Monday morning after it said its September quarter sales growth was 6.4% — a sharp slowdown from the 15.7% achieved in the matching quarter in 2016. Its South African operation grew sales 8.1%, while improved rain after the previous year’s drought slowed internal inflation to 0.9% from 7.2%. Measured in rand‚ sales from its stores outside of SA declined 1.8%.

 

Famous Brands reported on Monday that shareholders would receive no interim dividend for a second year as the group whittled down debt from its £120m UK acquisition. The restaurant franchiser reported on Monday that its debt had risen to R2.9bn at August 31 from zero the prior year. A sharp increase in financing costs saw Famous Brands’ after-tax profit more than halve to R192m from R411m in the matching period.

 

Adcorp said on Monday it ended its interim period with current liabilities outrunning current assets by R184m‚ thereby breaching agreements with bondholders. It fell into an after-tax loss of R50m for the H1 to end-August from the matching period’s R136m profit. Adcorp said its interim revenue declined slightly to R7.75bn from R7.89bn.

 

The share price of Rhodes Food fell 4.5% to R19 on Monday after it warned that earnings had fallen by up to 30%. It said it expected to report‚ on November 21‚ a decline in basic and HEPS for the year to end-October of between 25% and 30%. Overall sales grew by 10.8% from the prior year even though export sales declined 18.1% due to the strong rand.

 

ECONOMIC NEWS

Standard Bank's survey showed on Friday that the pace at which SA’s manufacturing sector was contracting slowed in October. The Bank's PMI rose slightly to 49.6 in October from 48.5 in September. Indices tracking output and new orders continued to decline albeit at a slower pace while stock of purchases also remained in contraction. On Wednesday, Absa reported that its Absa purchasing managers index (PMI)climbed to its best level in five months in October but the sector remains under pressure. The index was up to 47.8 index points in October from 45.6 in September. The improvement was broad-based‚ with all five main subcomponents increasing.

 

Sales of new vehicles in SA rose again in October compared with a year earlier‚ but exports declined, according to Naamsa. It cited sharp falls in prices‚ falling interest rates and “highly attractive” special offers for the improvement‚ and warned that the effects of Finance Minister Malusi Gigaba’s medium-term budget had not yet been seen in the car market. New vehicle sales rose 4.6%‚ or by 2‚255 units‚ to 51‚037 in October from 48‚782 units a year earlier. Exports‚ however‚ fell 8.3%‚ or by 2‚544 units‚ to 28‚229‚ which Naamsa said was due to “the impact of the recent massive storm on Durban port operations and on production volumes at the Toyota Durban plant”.

 

Statistics SA reported on Tuesday that unemployment remained at 27.7% in the September quarter. This marked a deterioration from the 27.1% from the same quarter in 2016. The number of employed people increased by about 92‚000 from the June quarter‚ but this failed to reduce the overall unemployment level because the working-age population increased by about 156‚000 people, it said.

 

SA exported R4bn more than it imported in September‚ SARS reported on Tuesday. During September‚ SA exported R101.76bn worth of goods‚ which was 2.6% higher than the same month in 2016. The country imported R97.76bn‚ which was 6% higher than in September 2016. August’s trade surplus was revised upward to R5.98bn from the previously reported R5.94bn.  SA’s trade surplus in September 2016 was R7.01bn.

 

Moody’s described the medium-term budget policy statement (MTBPS) Finance Minister Malusi Gigaba presented last week as “credit negative”‚ suggesting the ratings agency was likely to downgrade SA’s rating to junk status at its next review on November 24. Moody’s said the medium-term budget “signals a marked credit-negative departure from earlier fiscal consolidation efforts”. Moody’s is the only one of the big three ratings agencies to still rate SA one notch above junk.

 

Private sector credit growth moderated in September‚ reflecting sluggish economic growth, the Reserve Bank data showed on Monday. Private sector growth decelerated to an annualised 5.59% in September‚ from 5.98% in August.  M3 money supply‚ the Bank’s broadest measure of how much money is circulating in the economy‚ grew 6.72% year on year‚ from 6.48% in August.

 

Motorists heading off on their summer holidays need to brace themselves for a 30c-40c/l jump in petrol prices in December. Dawie Roodt‚ an independent economist‚ said in a note e-mailed on Monday morning that he expected a steep increase over the peak holiday travel season following the rand’s depreciation since Wednesday’s speech by Finance Minister Malusi Gigaba coupled to rising oil prices as the northern hemisphere goes into winter.

SOURCE: BDPro

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