Johannesburg — ALTX-listed heavy building materials supplier Buildworks posted a net profit of R49m yesterday in its maiden full year to August, despite "challenging market conditions".

The group, which listed a year ago this month, said the profit was in line with its prelisting forecast and was largely attributable to tight operational controls.

The company turned over R201m and posted headline earnings per share of 11,04c, which it also said were in line with expectations.

CEO Raoul Gamsu said the results were achieved despite difficult market conditions during the year.

Early in the year, the group had experienced higher rainfall than expected and severe power interruptions, while the global economic slowdown had had a knock-on effect on margins in the second half.

"The power cuts and the deteriorating domestic economic conditions in particular had slowed down the number of new developments, which had an impact on us," Gamsu said.

He said the performance during the second half had been below expectations. The group had projected much better results on the basis that the construction business tended to pick up in the second half of the year.

"We felt demand constraints in the second half when one would have expected a far greater six months."

The building products division had been affected the most by tightening economic conditions as it was particularly sensitive to the interest rate and the availability of capital.

The residential building sector has suffered for much of this year as tougher domestic economic conditions have put the brakes on demand for housing. This has affected several companies which are heavily exposed to this market.

"A recovery in residential housing will have an immediate impact on the prospects," he said.

The aggregates business should sustain its growth as it compensates for the downturn in residential and commercial with increased volumes for the huge roads programme in Gauteng, the group said.

Gamsu said with economic conditions likely to remain tough in the coming months, the group expected margins to remain under pressure. "In the short term, margin contraction is expected as excess inventories make it difficult to recover the historical increase in input costs."

The results did not include Buildworks' acquisition of Consolidated Power Projects (Conco) for about R500m, announced in July. The deal more than doubled the group's size and marked its entrance into the high-growth electricity sector, where the government and private sector have multibillion-rand investment plans.

Gamsu said for the financial year to August next year, 83% of the group's revenue would be generated by the power supply sector, with Conco's order book standing at R1,2bn in September. Conco had submitted tenders - for which it was awaiting adjudication - of R1,76bn.

The group expected its R70m tile roof plant - to be launched in the second half of this year - to have a positive "material impact" on earnings in 2010.