13 May 1999: South Africa“s Plate Glass and Shatterprufe Industries Ltd. (PGSI) said it expected to recover next year after punitive interest rates and a depressed domestic economy smashed 1999 earni…
13 May 1999: South Africa“s Plate Glass and Shatterprufe Industries Ltd. (PGSI) said it expected to recover next year after punitive interest rates and a depressed domestic economy smashed 1999 earnings. PGSI reported a sharp drop in headline earnings per share (EPS) to 160.5 cents for the 12 months to 31 March, versus 624.0 cents during the same period last year. The diversified industrial holding group declared no dividend, compared to 333.0 cents declared in 1998. Analysts had forecast headline EPS of 210.0 cents and a dividend of 78.0 cents. “The results don“t look good. We are well down,” group chairman Ronnie Lubner said. “Market conditions in our three fundamental activities in southern Africa have been extremely bad, the worst we have seen ever,” he said. The group“s core areas of activity – building, furniture and the automotive industries – have been hammered by high interest rates. South African prime lending rates were hoisted to a decade high of 25.5% last year, pushing the building and automotive sectors into recession. Prime lending rates have since dropped to 19%. But Lubner said PGSI was in a positon to recover significantly in the 2000 financial year, provided the domestic economy maintained its gentle recovery. “Falling interest rates will help, but there is not going to be any huge lurch,” he said. “We have done a lot of cost improvements, we are really in a position that if the market just improves slightly, we should start to look good again.” Lubner said the group“s gearing, which shot up to 330% from 180% in the 1999 financial year, would also be reduced through the disposal of its 75% interest in board manufacturer, PG Bison. PGSI“s debt swelled to 2.4 billion rand following further capitalization projects. He said talks regarding the sale of South African Breweries (SAB)“s 68% stake in the group continued.