BUILDING: Mazor To Crack The Glass Market
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CAPE TOWN claddings specialist Mazor appears to be banking on its recent shift into the glass sector to pull it through a (hopefully temporary) lull in its traditional steel and aluminium businesses.
Mazor Steel designs, supplies and erects structural steel frames, while Mazor Aluminium designs, manufactures and installs aluminium doors, windows, shopfronts, facades and balustrades for construction groups.
The glass division is a completely different beast. It manufactures and distributes laminated and toughened safety glass and double-glazed units.
Mazor’s efforts in the glass sector may well have been helped by the recent setbacks at glass and aluminium manufacturer AG Industries, which looks set for liquidation. Of course, the demise of a major player like AG Industries also suggests the glass business might not be a fragile prospect.
Mazor’s interim results to end August reflected very tough trading conditions – especially in the construction sector in the Western Cape (where the group still plies most of its business).
Mazor CEO Ronnie Mazor reports that excess capacity in the market induced significant price pressure and eroded operating margins.
He says protracted contract delays and cancellations in the private sector (due to credit constraints) negatively impacted the steel and aluminium divisions.
In the six month period Mazor’s aluminium division saw year on year turnover plunge from R68 million to just R11 million. The steel division saw its turnover plummet from R83 million to just R29 million.
The fledgling glass division, though, managed to increase turnover from R29 million last year to R44 million.
But while the much diminished aluminium and steel businesses still traded in the black (notching up profits of R6 million and R2 million respectively), the glass division still traded some R2.8 million in the red.
Even though the glass division is not kicking through profits yet, Mazor felt confident enough to augment operations by purchasing 100% of Glass Unlimited.
Hopefully the new acquisition will help Mazor’s glass division - which comprises Compass Glass and PE-based Independent Glass – to continue capturing market share (as evidenced by the strong turnover growth in the interim period).
Explaining the Glass Unlimited acquisition, Mazor says the company identified the need to expand its national footprint in the glass industry – “and particularly the potential for growth in the Eastern Cape”.
He says Glass Unlimited, based in Port Elizabeth, was targeted as a suitable partner for this expansion.
But it’s not like Mazor has bought a sprawling business. Glass Unlimited is either a very marginal operation or running at sizeable losses because Mazor forked out less than R500 000 in cash and shares to buy stock and fixed assets.
It will be really interesting to see whether the company can squeeze something out of this deal in the full year to end February 2011. Perhaps successes in spinning profits at Glass Unlimited may even prompt Mazor to look at some of the pieces in AG Industries?
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