BUILDING: Cape Suppliers Construct Strong Profits
Recent Western Cape Business News
CAPE Town-based building supplies group Afrimat and Mazor continue to defy the downturn in the broader infrastructure/construction sector.
Both companies operate in areas where some illustrious competitors are floundering, which suggests that both Afrimat and Mazor have set their respective business models on sound foundations.
The fact that both companies are willing to pay dividends when some of their competitors are desperately foraging for fresh capital certainly suggests the respective executive teams are looking forward without too much trepidation.
Mazor operates mainly in the aluminium and steel sectors. The steel division designs, supplies and erects structural steel frames, while the aluminium division designs, manufactures and installs aluminium structures (doors, windows, shopfronts, facades and balustrades).
Mazor has also taken its first steps in the glass sector.
Afrimat specialises mainly in aggregates but also has substantial interests in readymix cement and concrete manufactured products.
While both Mazor and Afrimat have their roots in the Western Cape and continue to derive a large chunk of their business from the region, both companies have successfully diversified into new geographic areas.
The numbers really speak for themselves over the six months to end August 2009. Mazor recorded a 46% increase in revenue to R180 million, while net profit skittered up 27% to R32 million. Afrimat reported a 21% increase in revenue to R393 million while earnings jumped by the same margin to R40 million.
In the half-year to end August Mazor’s core steel and aluminium divisions successfully expanded further into ‘high-growth’ regions like Port Elizabeth and KwaZulu-Natal to counter the impact of a flailing economy in its traditional base of operation.
Mazor CEO Ronnie Mazor says following the downscaling of projects in traditional markets the group is now also seeking larger-scale, higher margin projects outside of South Africa. He says Mazor is making inroads into Namibia and Angola.
Afrimat, also in the half-year to end August, benefited from a strong performance in its aggregates operations despite seeing tough trading conditions in the economic downturn.
Afrimat CEO Andries van Heerden says the aggregates division successfully countered a dramatic slowdown in private residential and commercial spend, as well as intensified competition in the economically hard-hit Western Cape.
He says processing plants are all fully-commissioned and well-placed to supply government infrastructure projects and boost the aggregates division’s revenue going forward.
Van Heerden, however, notes that Afrimat’s readymix concrete division under-performed during the period, hit by a sharp fall in volumes in the Western Cape.
Like Mazor, new business development remains a key focus for Afrimat. Van Heerden disclosed that a dedicated team continued to explore opportunities in existing markets as well as in new markets where high growth is anticipated.
During the interim period Afrimat acquired a 66% stake in Blue Platinum Ventures 56, which holds a quarry located near the high growth area of Lanseria in Johannesburg.
(See our article on page 5 ‘What’s hot and not for 2010’ for more on Afrimat and Mazor).
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