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Alert Steel share price drop as it fails to get out of red

2 Apr 2014

ALTX-listed Alert Steel's share price fell 22% after its results for the six months to the end of December last year were released and showed that the headline loss had widened by 14.7% to R31.8m.

Alert Steel has still not managed to shake of losses in its building supplies businesses. Image: Alert Steel

The company said trading conditions were particularly "challenging" in Limpopo‚ where it has a significant presence.

Alert Steel's split between cash business and credit continued to grow‚ with cash business increasing to more than 65% of group revenue of R405m

"We have‚ however‚ seen a slowdown in contracting and credit business during the period as a result of tighter credit control‚" Alert Steel said.

The group said it had changed its focus from rolling out containers that act as mini-stores‚ to concentrating on the opening of express stores. This was to accommodate the reintroduction of hardware and building supplies into the group‚ which now consisted of 15 branches‚ 14 express stores and 31 container outlets.

Alert Steel said the monthly overhead cost of running the business continued to be a key focus area. It aimed to become the lowest cost supplier in its sector.

To this end‚ in the period under review‚ the group had reintroduced hardware and building supplies‚ together with steel and steel-related products‚ to offer a complete range of products for the building industry.

In line with this‚ Alert bought all the trading stock worth R23.6m of Build Kwik Wholesalers‚ a retailer in the building and hardware supplies industry. It also acquired certain fixed assets from Build Kwik worth R6.1m.

It said the full benefit of these additional stores would come to fruition in the next six months.

The firm would develop 28 stores between now and April next year in the greater Johannesburg and Pretoria areas.

Source: I-Net Bridge

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