Sephaku reveals cost-cutting plan despite net profit rise

Sephaku Holdings CEO Lelau Mohuba, says the company embarked on cost-cutting measures that include reducing the number of board members from ten to seven.

Building and construction-materials group, Sephaku Holdings, says it has embarked on a cost-reduction programme aimed at reducing head office expenses.

The company which has a portfolio of assets focused on the building and construction-materials industry, has embarked on cost-cutting measures that include reducing the number of board members from 10 to seven, says CEO Lelau Mohuba.

The reduction of the company’s head office expenses is meant to soften the  effect of difficult trading conditions in the second half of the current financial year.

The company, the portfolio of which includes subsidiary Métier Mixed Concrete and associate Sephaku Cement (SepCem), said on Tuesday  it expected the constrained trading environment to persist. The group said mixed concrete supplier Métier had been negatively affected by the depressed construction sector. 

“Industry cement volumes are expected to decrease by between 5% to 10% year on year as demand continues to be muted. The group’s focus for the next 24 months is to reduce debt, reduce head-office expenses, complete the fleet efficiency-improvement programme at Métier and continue to evaluate opportunities to enhance shareholder value,” the company said.

Sephaku said cost cutting would focus on high expense items such as travel “and other noncritical operational activities”.

Mohuba said the company would not replace former board member Mpho Makwana, who resigned in early October.  Makwana had been on the board for more than five years. He said board members Rose Raisibe Matjiu, who had been on the company’s board since 2005, and Kenneth Capes, who was previously an executive director for business development, also resigned on Monday. Capes had served on the board since 2013.

“Their active participation in the group has been gradually decreasing due to additional external commitments, hence their decision to resign from the board,” Mohuba said.

The company said Capes would continue to consult for the group on business development “as and when required”.

In the six months, Sephaku’s net profit rose  79.2%, from R14.8m to R26.5m. Basic earnings per share  75.9%, from 7.29c to 12.83c, and headline earnings per share  77.3%, from 7.10c to 12.59c.

Métier increased revenue  4.5% to R468m, while net profit decreased  35.9% to R20.3m. 

SepCem is a subsidiary of Lagos-based Dangote Cement, and has a December financial year-end.