Tough times for WG Wearne

Johannesburg - Ready mixed concrete supplier WG Wearne Limited posted a headline loss per share of 7.22 cents for the six months ended August versus headline earnings of 3.8 cents for the previous comparable half-year.

"The group has experienced a particularly difficult six months ended 31 August 2009, resulting in a loss of R12m for the period compared to the R5.2m profit reported for the six months ended 31 August 2008.

"Despite this, the group's cash flow from operating activities was a positive R36.5m for the six months. This was primarily due to the effective management of working capital," the group stated.

Intense competition in a sector that has been dominated by the slowdown in commercial and industrial development as well as the complete collapse of the residential housing market saw revenue drop by 14% when compared to the 2008 period once the acquired Portland Group revenue of R35.6m for the six months is excluded, the group added.

The hardest hit was the ready mixed concrete division which has seen revenue for the six months decline by 18.6%. This division has the biggest exposure to the residential housing market and caused operating profit margins to be under severe pressure.

Both the aggregates and concrete products divisions showed promising revenue growth when compared to the 2008 period. This was mainly due to the government's increased infrastructure spend on roads and utilities. Despite the results, the group remains upbeat.

"Although the operating results for the period were poor, the directors believe that the worst of the downturn is now over, with a muted recovery expected in the second quarter of 2010. The directors believe that this, combined with the cost savings resulting from the restructuring, will see the results of the group improve in the 2011 financial year," it said.

- I-Net Bridge