Wearne eyeing opportunities

Johannesburg - Concrete supplier WG Wearne (WEA) on Thursday reported a fully diluted headline loss per share of 10.9c in full year results ended February, against a 26.1c profit in 2008.

The group announced a fully diluted loss in earnings per share of 0.5c against a 26.6c profit in the previous period, while no dividend was declared for the period, in line with group policy.

Group revenue increased by 10% to R587.0m, however gross profit decreased by 14% to R155.5m. Gross profit margins reduced to 26%, due to intense competition in a declining market, WG Wearne said.

EBITDA was at R60.4m, against R105.7m earlier.

WG Wearne said the year under review "has been one of the most challenging years experienced in the ninety nine year history of the group".

"The second half of the financial year was especially difficult as the group experienced a major downturn in demand for its products."

The group attributed its performance to the international credit crisis and the subsequent collapse of commodity prices, which caused several mining projects to be put on hold or completely cancelled.

Moreover, the rising interest rate environment and subsequent collapse of the residential market severely affected demand for building materials especially in Gauteng and the Western Cape, it said.

"The cancellation of the contract to supply ready-mixed concrete to the Houghton Golf Estate Development. The project was stopped due to non-payment by the developer and resulted in a loss of further revenue from this project of approximately R20m. The group has been fully paid by the contractor."

Looking ahead, WG Wearne said that while operating results for the period were poor and the general conditions in the commercial and residential construction markets remained weak, "the increased spend on roads and infrastructure by the government continue to create opportunities for the group".

The group's quarries except for the Portland quarry in the Western Cape have major road contracts in close proximity, which should see the volumes increase from the current financial year. There are also a number of potential new projects for the mobile crushing and drill and blast divisions which are currently running at full capacity, WG Wearne said.

- I-Net Bridge