Industrial Reporter
THE country's largest building materials supplier Cashbuild continued its growth streak, reporting robust earnings in its half year results yesterday.
Cashbuild revenue increased 16% to R835,6m for the six months to December, and it expected this growth in sales to continue into the second half of the year.
Gross profit was up 11% to R172,5m, while attributable earnings were up 11% to R26,1m.
Headline earnings a share increased 10% to 114,9c.
Abvest small-cap analyst Shawn Stockigt said the results were pretty much in line with expectations.
Stockigt said that while earnings growth for Cashbuild had slowed down he would be happy to see headline earnings a share growing between 10% and 12% from now on.
In the corresponding period, the building material supplier increased revenue 34% to R721,4m and pushed up headline earnings a share by 187%.
Cashbuild CEO Pat Goldrick said: "People who believed that we or any other company operating in SA today could report results like those of the last couple of years forever were overly optimistic."
However, he was confident there was enough growth in the building material's market to sustain the growth of the company .
SA's market for building materials the country is thought to be between R30bn and R60bn a year and is still growing.
Cashbuild's market share is between 3% and 5%. Its objective is to grow revenue to 30% of market .
Goldrick said the demand for building material in SA would probably see revenue for the group growing at about 18% for the latter half of the year.
Cashbuild planned to open another five stores in addition to the five it had already opened in the period under review. Goldrick said each new store would make about R12m in revenue a year.
The roll out of its new information technology (IT) system was going make accessing information a lot easier for the group, Goldrick said. While the current IT system provided accurate information, it was eight years old and split over eight separate systems.
Although the group experienced a 1% drop in prices over the past six months, it was now starting to see prices increase, Goldrick said.
While the drop in prices hurt its margins, this had been more than compensated for by the growth in unit sales over the period.
Cash on hand rose 25% to R210,5m and the group had no interest-bearing borrowings.
By John Fraser
The strong rand may have made life extremely tough for SA's exporters, but
it means that thousands of South Africans are now upgrading their home entertainment
systems from video to DVD.
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