Brikor posts strong results despite slowdown in the construction sector

Posted On Wednesday, 30 October 2019 11:29 Published by
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AltX listed, Brikor Limited a manufacturer and supplier of building and construction materials which also mines clay and coal through its wholly owned subsidiary Ilangabi Investments 12 was in provisional liquidation just four years ago.

 -GARNETT-PARKIN-

Despite the severely depressed construction industry, it posted impressive interim financial results for the six months ended 31 August 2019.

There has been consistent growth and the group ended the financial period with an attributable profit from continuing operations of R11,4 million (August 2018: R2,1 million). Revenue increased by 8,1% to R166,1 million, net asset value climbed by 19% to 12,5 cents per share and net tangible asset value grew by 32,2% to 7,8 cents per share. Brikor enjoys yields in its business operations where headline earnings per share increased by 275% to 1,5 cents per share.

The severe crisis in the construction and building sectors has resulted in a number of JSE-listed construction companies applying to go into business rescue, including Group Five, Basil Read and Esor, while Aveng has experienced serious financial difficulties.The reduced infrastructure spend in the country has led to large scale retrenchments.

CEO, Garnett Parkin reports, “These interim results are a consequence of stringent operational streamlining of our internal processes. We decided to develop the group’s capacity to produce our own bricks and stopped buying-in bricks from third parties. We were able to accomplish this by increasing labour shifts. This resulted in a net saving of R1 million, despite inflationary increases and the increased costs associated with expanding internal capacity.”

“The competitive South African economic environment continues to put strain on selling prices in the bricks segment. However, the coal segment experienced the opposite effect with the demand yielding higher prices. Gross profit for the coal segment increased by 63,2% to R27,9 million (August 2018: R17,1 million), as a result of the streamlining of the environmental rehabilitation via rental of bulldozers. With the ramps being less steep and the distance to the sizing plant being shorter, the costs have been substantially reduced, with lower spend on diesel being the main contributing factor.” 

The changes to business operations have yielded substantial growth for Brikor. It has built confidence for the company’s workforce not only because of the extra shifts, but there has been considerable investment in staff training. Partnerships with local B-BBEE suppliers have seen an increased spend amounting to R1,8 million more when compared to the prior period.

Brikor has complied with regulation in terms of environmental, social and governance requirements and has focused on reducing risk.

The construction industry is the top global consumer of raw materials. The industry generates between 25 to 40 percent of the world’s carbon emissions. Smart planning and a sustainable approach can reduce energy consumption and pollution, and Brikor has undertaken these measures. The company opts for restoring equipment rather than replacing.  Brikor also completed their local economic development project and handed over a fully built library to the Kwanele Primary School in the City of Ekurhuleni this month.

Parkin concludes, “The serious setbacks we experienced in 2013 meant that we needed to re-evaluate the business and to become more innovative which is now paying off in our improved results.”

Last modified on Wednesday, 30 October 2019 11:52

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