South Ocean Holdings' electrical cable manufacturing subsidiaries has approached the government to stave off the import of electrical cables at "dumped prices," or at prices that are lower than what they could feasibly be manufacturer at.
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South Ocean Holdings’ share price fell over 3% on Friday after reporting a heavy 86% drop in operating profit as margins crumpled from rising manufacturing costs and increased competition from lower-priced imports.
The share price closed at 94 cents on Friday on the JSE; a year ago, the thinly traded share was priced at 150 cents each, a decline of 37%.
The operating profit for the year to December 31 for the investment holding company, which has three operating subsidiaries in electrical cables, wire, and accessories, and which holds property for investment purposes, fell to R11 million for the year from R80m the year before.
“The group retained its market share by the increased distribution of stock through its network of associates and the expansion of its customer base. The retention of market share comes at a cost of reduced margins due to the continued significant level of finished goods imported since 2023,” the company’s directors said.
“The significant level of finished goods imports had a substantial negative impact on the cable manufacturing industry, particularly in 2024 and especially the 2025 years.”
No dividend was declared, compared with 5,50 cents per share declared a year before. Net asset value per share declined by 4% to 322,4 cents a share.
Headline earnings per share fell by 70% to 6,81 cents from 22,56 cents. Revenue was down by 3% to R2.5 billion from R2.57bn. Some R2.52bn of revenue was derived from electrical cable manufacture, while R20.9m revenue came from property investments.
Short-term debt stood at R13.1m from R19.2m last year, and there is a R450m revolving credit facility available. The net loss for the year came to R15.3m versus a profit of R33.87m a year before.
Directors said the landed cost of imported goods reduced by about 10% in 2025 compared with 2024.
In contrast, the local industry experienced higher cost of materials, labour, electricity, and other costs, which included South African Bureau of Standards (SABS) and National Regulator for Compulsory Specifications South Africa (NRCS) costs.
A profitability improvement plan saw the group control expenses, which contributed to the results.
In an attempt to block finished and semi-finished goods imports, the group contributed to a “Safeguarding Application”, which was submitted to the International Trade Administration Commission (ITAC) by a third party through the cable association.
The outcome of this application was still pending. The group also lobbied the Department of Trade, Industry and Competition in an attempt to stop these imports, which are considered “dumping,” the group said.
The group’s net cash used during the period amounted to R167.2m, compared with R37.2m generated in 2024, which reduced the bank balance to a bank overdraft of R45.7m from a positive R121.5m balance the year before.
On the outlook, directors said fundamental political and fiscal uncertainty remained the key drivers of economic reality, so the group was focusing on reducing costs and using technology to drive growth, productivity, and greater efficiencies in a more sustainable manner, which would improve the profitability of the operating entities.
“Management is confident that the above actions will further improve the group’s profitability. The board will continue its journey towards maintaining its B-BBEE level, recognising the importance of transformation required by the market,” they said.
BUSINESS REPORT