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BUILDING: Mazor's Local Pool Dries Up

 



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SPECIALIST claddings business, which in recent years was involved in some of Cape Town’s best known building projects, appears to be battling to find new work locally.

Mazor, which specialises in aluminium and steel cladding for buildings, has been involved in high profile construction projects like the 2010 Green Point Stadium, the Cape Town International Airport expansion, Convention Towers, the Westin Grand Hotel, the South African Large Telescope (SALT) and a number of major shopping centres. In the last financial year Mazor saw a sharp drop in revenues (by almost a third, in fact) to R187 million, while margin squeeze saw operating profit plunging 96% to just R1.7 million (from R46 million the previous financial year).

Chairman Monty Kaplan reports that revenue in Mazor Aluminium and Mazor Steel declined 68% and 47%, respectively.

He says with margins squeezed, the operating profit in these operations were down 74% and 83% respectively.

Mazor can at least take some comfort that its new Glass ventures (which are mostly outside the Western Cape) started kicking some meaningful top line growth. Mazor’s annual report shows the Glass division increased external revenues by 47% to R93 million. More encouraging is that operating losses reduced by more than 20% to R7.6 million. Still, the immediate outlook for the core contracting businesses in the Western Cape, according to Kaplan’s annual review, is not terribly promising either. He notes: “A dearth of contracts continues to define the market, continually intensifying competition and depressing margins, particularly in the retail and leisure construction segments which have traditionally been a stronghold for Mazor.”

Kaplan says the Western Cape, Mazor’s primary base, saw the contract pool “virtually dry up” during the year. Some of the projects Mazor was involved in included work for local retailers - Pick n Pay in Ottery and Shoprite in Brackenfell.

Kaplan adds that prevailing trading conditions are not conducive to accessing and penetrating new markets. “We expect conditions to remain harsh for the remainder of 2011.”

But he believes there are some positive indications of an improvement in 2012 with a more solid upswing expected in 2013.

In addition, he says, the beleaguered Western Cape economy is beginning to show signs of slow recovery. “This should increase activity in Mazor’s primary market from 2012 onwards.”

Kaplan stresses that with prior investment in plant, stable capacity, established capability and geographic spread, Mazor is well placed to benefit from a recovery in the construction sector.

He says in the interim Mazor will continue to steer overall product offering from manufacture to materials supply to capture greater margin returns and the major growth opportunities.

Further, we will maintain a strict watch on working capital and overheads to ensure a sustainably lean financial framework.”

On this note CBN is encouraged to note that Mazor’s annual report shows a reassuring net cash pile of close to R70 million – which should provide a cushion in the lean months ahead.


 
 
 
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