BUILDING: Wearne's Portland Blues Continue
Recent Western Cape Business News
BUILDING materials supplier WG Wearne is still battling to get its money’s worth from Cape Town based Portland Group.
In April 2008 Wearne announced a deal to buy Portland, a 20 year old supplier of ready mixed concrete and aggregate, for over R100 million.
The deal was initially looked upon as a way for Wearne – then predominately operating in Gauteng, the Free State, North West, Limpopo and KwaZulu-Natal – to gain access to the Western Cape market.
At that stage Portland was an established profitable operation with a presence and solid track record. What’s more, Portland’s operating margins were ‘significantly higher’ than Wearne’s margins.
Wearne’s latest annual report, however, shows that Portland is actually battling for viability.
While no specific reference is made to Portland’s operating performance in the comments on operations, an annexure on investments and related party transactions with subsidiaries shows just how badly the Cape business is faring.
There is a net loss (after tax) of R75.6 million shown in the column for Portland Holdings. Under subsidiaries there are losses for Portland Aggregate Sales (R1.6m), Portland Concrete Pumps (R500 000), Portland Hollowcore Slabs (R2.5m), Portland Quarry (R280 000), Portland Readymix (R31m) and Cape Town Ostrich Sand Mines (R73 000).
The performances of the Cape operations is perhaps understandable since the Western Cape building supplies market has been weak in the last 18 months.
Other companies with Cape building supplies operations (Afrimat, Argent) have also bemoaned weak conditions, although it does not seem their respective operations have been battered quite as badly as Portland.
Wearne chairman John Wearne, however, maintains in his annual review that the worst of the downturn is over – even if tough trading conditions are expected to persist through to the second half of 2011.
He says increased government spending on roads and infrastructure will create opportunities for the group. CBN hopes some this spend finds its way to the beleaguered Portland Group.
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