Dorbyl up 21% on plan to sell Alpine unit
Carli Lourens
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Trade and Industry Editor
THE market has given industrial group Dorbyl’s mooted sale of its US operation a big thumbs up, despite the fact that the business is the group’s largest profit generator.
Dorbyl’s share price jumped 21% to R40,01 yesterday after it said on Friday it intended disposing of its Alpine building products division in the US for $158m. The major portion of the proceeds would be distributed to shareholders.
The move leaves Dorbyl with only its automotive component manufacturing operations in SA, which are small and not very profitable.
The South African business’s operating income before exceptional profits or losses was R31m in the year to March, whereas the US operation recorded R122m.
Several analysts welcomed the move, saying Dorbyl was selling Alpine, which it bought for $50m seven years ago, for a good price at the right time. “Alpine has been a great investment, but we suspect that the sustainability of the US housing boom is questionable at this level, and concur that profit-taking is prudent,” said Warwick Lucas of Imara SP Reid yesterday.
Chairman Noel Phillips said Dorbyl intended to continue building the remaining automotive business, in which it had invested quite heavily over the past year or two.
And with car exports increasing and the rand showing signs of weakening, things were looking much more positive.
Phillips said it was “very difficult to comment at this stage” on whether Dorbyl would look to also dispose of the automotive business.
Lucas said the remaining automotive operation would be worth about R300m in cash, possibly not worthwhile to keep listed.
But if the rand had bottomed, there would be scope for growth.
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