Dorbyl's local operation hurt by rand, but US unit
ENGINEERING group Dorbyl's profit before tax plummeted 58% in the six months to September to R109,5m compared with the corresponding period last year, while prospects ahead appeared to be more gloomy.
CEO Bill Cooper said yesterday that the results were a tale of two parts the strong rand continuing to batter the group's South African operation, Dorbyl Automotive Technologies (DAT), while US engineering business Alpine performed "exceptionally well".
DAT had cut about half of its exports and some products were still being exported at a gross margin loss.
DAT's workforce had been reduced by 700 employees in the year to date to about 2500.
Alpine, on the other hand, was recruiting new employees. The company lifted operating profit 62% to $7,2m and increased its market share.
Alpine's dollar revenue increased 13% when compared with the corresponding period last year. In rand terms, however, its revenue dropped 17%.
DAT and Alpine contributed roughly equal parts to the group's revenue.
"The real issue is the value of the rand," said Cooper. "We've been absolutely traumatised by it."
There was "nothing wrong with the way Dorbyl conducted its business", he said.
"No one seems to be concerned about job losses in the country. Every time a politician says the rand is undervalued, it presents a full opportunity for the rand to strengthen even further," said Cooper.
He said that in addition to the rand, revenue, profits and earnings were negatively affected by disposals.
"The effect of the disposals on the group's turnover was that 63% became foreign currency based, adversely affection the translation of the dollar earnings of the group's subsidiaries based offshore."
The disposals of Global Roofing Solutions and Dorbyl Transport Products were completed during the period under review, boosting the group's cash position.
The downsizing of the group saw revenue fall 45% to R977,5m in the reporting period. Revenue from continuing operations declined 8%.
Headline earnings, at 118,5c a share, had halved from 234,3c in the corresponding period.
Dorbyl's share price closed 5c weaker at R15,35 on the JSE Securities Exchange SA.
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