South Africa: AGI Blames Loss on Roodekop Snags, Power Cuts

GLASS and aluminium company AG Industries (AGI) yesterday reported a headline loss of 15,4c per share for the year to June, saying the "year under review continued to be difficult" for the South African operations.

The company said the results were influenced by operational problems at the Roodekop manufacturing facility near Johannesburg, which started having a "material impact on both operating revenues and margins" from January last year onwards.

AGI said that as expected these problems had resulted in a loss in this division of about R37m for the year. While action had been taken, the problems had been resolved only by the end of January this year.

"As a result of the knock-on effect of these problems, full recovery of the group's domestic operations is expected within the next 18 months," AGI said.

SA's electricity crisis, which had resulted in widespread power outages this year, had also brought pressure to bear on the group. It said its domestic market was affected by the power outages in January and February, which were traditionally the group's slower months.

"The impact on the business through the loss of sales due to lower production, as well as negative sentiment in the economy in general, resulted in losses in these two months of about R28m. " The company said local trading conditions became increasingly difficult as the softening economic climate, rising inflation, higher interest rates and household debt affected consumer spending.

The company managed to reduce capital expenditure on property, plant and equipment to R34m, from R99m last year.

As far as its international business was concerned, AGI said the while the global economy slowed to some extent, its international division continued to have solid growth in Germany, the UK and Mauritius.