Johannesburg - The implementation of Distribution and Warehousing Network’s (Dawn) turnaround strategy had been severely affected by several issues in the second half of its financial year to March, it said yesterday.
The listed manufacturer and distributor of local plumbing and hardware brands said these issues included a loss in Grohe Dawn Watertech (GDW), in which it held a 49 percent minority stake, adversely affecting the total earnings of the group.
“This had a direct impact on earnings at the associated company investment level, as well as an impact on the building trading segment of Dawn being GDW’s largest customer,” the group said.
Dawn attributed the GDW underperformance mainly to the delayed approval of working capital funding facilities by the new controlling shareholder, which directly impacted on the efficiency of the five factories in GDW.
The group added that the turnaround strategy had also been severely impacted by a slowdown of government spending and payments, which had affected the infrastructure segment of the group; difficult trading conditions and currency losses in its rest of its Africa operations.
Dawn implemented comprehensive changes last week to the management team and its representation on the board of directors.
“The new management team and board of directors have initiated a turnaround strategy and a business plan is in the process of being finalised by the managing shareholder for review by Dawn.”
The group said that a sub-committee of the board of directors was evaluating and monitoring the progress against its turnaround strategy and identifying further performance improvements and operational efficiencies, including reviewing the exit of non-core and loss-making businesses.
Shares fell 1.15 percent to close at R4.30 yesterday.
BUSINESS REPORT