Western Cape Business News

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BUILDING: The Mixed Building Bag


Recent Western Cape Business News

WHILE it appeared to be a winter of discontent for most Western Cape building supplies, it seems Mazor – the steel, aluminium and glass cladding specialists – can afford to wear a sunnier disposition.

In the half-year to end August the Milnerton-based Mazor showed no signs of the sluggish building sector trade normally associated with Cape winters. The group reported interim turnover up over 60% to R124 million with operating profit coming in at R28 million.

CEO Ronnie Mazor says demand for the group’s products and services remained buoyant during the period with both core operations in steel and aluminium trading well.

Mazor says the recent decision to expand into Durban and Port Elizabeth benefited the steel division.

He indicates that the new glass division – which only begun operating in Cape Town several months ago – is reporting month-on-month growth of between 15% and 20%.

“With the integration of the Independent Glass and Compass Glass acquisitions, the (glass) division has successfully captured increasing market share.”

He points out that, since completing the Independent and Compass acquisitions Mazor extended Independent Glass’ distribution operations from Cape Town and George to Gauteng.

The group is also considering moving the glass division into the PE and Bloemfontein markets.

In contrast to the more cautious stance adopted by most other building supplies firms, Mazor looks ready for a cracking 2009 with business orders still buoyant.

Mazor says: “Our order book in hand to year-end at 28 February this year and beyond is healthy.”

He adds that Mazor had put hedges in place until June this year to counter the effects of the scarce supply of commodities like aluminium and steel in a time when the rand devalued.

Considering that Mazor traditionally has a stronger second half performance (as building activity generally picks up in the Cape summer), it seems possible that the group could push its top line to over R250 million. Not bad for a specialist, family owned business that until recently was known to only a few people inside the Cape building industry.

Elsewhere in the Cape indications were that the long, wet winter put a serious dampener on building activity.

Building supplies conglomerate Afrimat reported that its operations in the Western Cape were impacted by adverse winter weather conditions and lower economic activity.

More specifically the group’s aggregates division was impacted by lower volumes in the Western Cape because of the “extreme and prolonged winter conditions” as well as delays in municipal authorisation of projects, low expenditure on infrastructure budget by the provincial government and a downturn in residential property development.

But Afrimat expects an improved performance going forward as projects within the Western Cape region regain momentum. Group CEO Andries van Heerden says signs of a recovery in the region are already evident.

Invicta’s recently acquired ceramics retailing subsidiary, Tiletoria, is also trundling along in less than favourable conditions.

Invicta MD Arnold Goldstone says the local tile industry declined in line with the slow-down in the housing sector due to increased interest rates and the slow-down in GDP growth.

But he points out that Tiletoria – acquired in June 2007 – increased its turnover and operating profit in the half-year to end September 2008.

Goldstone says Tiletoria’s contribution to Invicta’s profits is not material, yet he remains confident the retailer’s profits will grow substantially in the next five years.

Argent Industrial’s Cape-based concrete supplier Megamix enjoyed a strong start to the year but trading margins came under pressure due to increased competition for construction work in the Western Cape.

With Argent essentially focussing on steel aligned engineering, one wonders how long before the Megamix business – along with corporate companion Villiersdorp Quarries – is put on the market? Cement supply giant PPC reported that its Western Cape sales volumes were flat compared with the previous year.

PPC directors noted that while the inland market continued to show some growth, excessive rain in the Western and Eastern Cape Provinces during the September quarter saw demand “reduce significantly”.

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