VENTURES: Racec: Green May Get Mean
Recent Western Cape Business News
EPPING-based rail and electrification specialist Racec finished 2008 on a high note, more than doubling profits to R17 million.While group executives have spoken positively about prospects for 2009 (despite the pronounced economic downturn in recent months), CBN can not help but notice a conspicuous under-performance by Racec’s recently acquired Greenbro subsidiary.
Last year Racec paid around R10 million for Greenbro, which manufactures industrial generators as well as polyethylene metering and distribution kiosks from premises in Philippi and Parow.
In financial 2008 Greenblo managed a respectable turnover of R44 million - up 38% from the previous year. Profits, though, were a scant R632 000.
The performance seems out of kilter with the buoyant Racec Group, and is somewhat surprising considering Greenbro’s high profile clients like the City of Cape Town, Eskom, Conlog, Actaris, Landis & Gyr, Adenco Construction and various municipalities.
Greenbro MD John Greenlees explains that profits did not enjoy the same growth as turnover due to the purchase of additional state-of-the-art machinery to streamline the production processes at the Philippi and Parow factories.
Additional costs, he says, were incurred when Greenblo moved its Parow offices and factory to larger premises to accommodate increased production and growth.
Greenbro also installed a new technology system to monitor production “from start to finish” – resulting in extra hardware, software and training costs.Looking ahead to 2009, Greenlees says Greenbro’s recent changes have positioned the company for an exciting year ahead.
“The energy crisis in South Africa has not abated and it is our opinion that it will continue for the next 15 to 20 years. Greenbro is positioned to meet the demand for the manufacture and installation of its generators.”
He says Greenbro has also started a generator service department in Cape Town as well as a sales and service office in Gauteng.
Greenlees believes government’s commitment to infrastructure spend in the future will not be limited to 2010. “The obvious lack of spending in the past cannot be addressed over a two-year period. It will take at least five to ten years to afford all South Africans the right to basic necessities…”
This means, Greenlees says, that Greengro will focus on Gauteng, Eastern Cape and KwaZulu-Natal for the supply of meter boxes, distribution boards and kiosks.
Greenbro also holds some export potential, although Greenlees describes the market as “exciting but volatile.”
He notes that Greenbro successfully secured the supply of 7 000 split meter boxes to Swaziland and 20 000 split meter boxes to Nigeria.
Greenlees says that in 2009 the company will focus on additional export areas such as Angola, Namibia and Tanzania.
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