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CONSTRUCTION: Mazor is profit-clad again
Recent Western Cape Business News
AFTER enduring three tough years Mazor Group, the Cape Town-based supplier of cladding for buildings, has pulled off a convincing comeback in the year to end February.
Mazor reported that revenue from continuing operations increased by a whopping 96% to R438,5m, underpinned by growth in all three divisions.
Mazor’s operations consists of steel (which designs, supply and erection of structural steel frames), aluminium (doors, windows, fenestration systems, shopfronts, facades and balustrades) and glass (laminated and toughened safety glass and double-glazed units).
CEO Ronnie Mazor said the company benefitted as the macro-economic environment continued to improve with the anticipated market turn-around becoming evident.
He said by the end of 2012 demand and supply had reached better equilibrium than at any other time in the past three years, which supported higher margins for Mazor.
Mazor said trading conditions for the company also benefitted from “substantial rationalisation” in the industry.
But he noted that while demand from the private sector increased significantly, the lagging residential sector continued to prevent growth from reaching pre-recession levels. Mazor said demand from the commercial sector - shopping centres and industrial - remained ongoing albeit. But there was pricing pressure as a result of tight client budgets.
Mazor’s aluminium division managed to capitalise on the more robust demand, and should return to pre-2010 profitability levels. The division generated a much-improved R185m in revenue with operating profits swinging strongly back into profits of almost R19m (compared with a R5m loss last year).
The Steel division also showed a marked improvement in the revenue line to R106m, but profits were down from R10m to around R7m.
Mazor said the Steel division experienced a smoother second half of the year with work flowing to take the division to almost full capacity. This followed a challenging first six months fraught with project delays.
Mazor’s newer glass division continued to boost top-line with turnover edging closer to the R150m mark. Losses, though, doubled to R3m.
Mazor said trading conditions in the Glass division remained challenging, but pointed out that demand had remained stable. He said division was in the last throes of a rationalisation exercise that was aimed at driving higher gross profits.
The larger losses at the glass division have seemingly not curbed Mazor’s enthusiasm for this segment growing into a significant earnings contributor in the longer term. Mazor indicated that in addition to expanding its premises and bolstering capacity with new equipment, the company had focused on optimising the glass division's raw material purchase and improving cost structures.
Looking ahead, Mazor said that with the construction industry having found firmer footing, the company expected steady growth in the first half of the next financial year and a kick-up to the bottom line in the second six months.
He added that in light of interest rates expected to remain favourable
in the short to medium term, demand was expected to normalise even further and create a more conducive environment to strategic planning.
Interestingly, there was a hint at a more aggressive tack in the year ahead.
Mazor said the company intended building on favourable market conditions to capture a more substantial market share and drive margin growth. “We will target higher margin projects as they are released to market.”
He also suggested further acquisitions to bolster the current services offering could be in the pipeline.
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