No Buildmax dividend after loss

 Johannesburg – Empowered supplier of opencast mining services and construction materials Buildmax on Monday reported a headline loss of 5.9 cents per share for the year ended February 28, from a previous headline earnings per share of 13.4 cents.

The group reported a basic loss per share of 96.8 cents, from 9.4 cents earlier.

Buildmax said revenue grew by 5% to R1.8bn, from R1.7bn.

Earnings before interest, tax, depreciation and amortisation (Ebitda) decreased by 52% to R227.5m from R477.8m.

In view of the final results no final dividend has been declared.

The group operates through two business units: mining services and construction materials.

Buildmax said the industries in which it operates continued to be affected by the global economic crisis. The group's principal business, opencast mining services, is dependent on replacing its earthmoving equipment at appropriate intervals and on securing reasonable prices for its second-hand equipment.

"The slowdown in the world economy has resulted in a surplus of second-hand equipment and vehicles, which has reduced second-hand resale prices by as much as 50%. This situation is not expected to reverse before the majority of the group's equipment needs to be replaced," it said. The group said that its construction businesses find themselves in a similar position.

Looking ahead, Buildmax said that the necessary restructuring of the mining services business unit would only be completed in the first six months of the new financial year, but management expects a significant improvement during the second half of the 2011 financial year.

"The proceeds of the rights issue and the right-sizing of mining services will significantly improve the financial position of Buildmax with borrowings expected to decrease by more than R300m by the end of FY 2011.
 
"Management has identified the need to add less capital intensive businesses to the mining services business unit.

"The global economic crisis has adversely affected the industries in which Buildmax operates. Forecasting with any degree of certainty is difficult in these times but should the economic outlook not deteriorate further the group is relatively confident it will meet its performance objectives over the medium term," it said.

- I-Net Bridge