Calgro M3 CEO on results, achieving sustainability amid Covid-19 crisis
Calgro M3 is confident on the outlook for its memorial parks business where annual revenue grew over 22 per cent to R25.7 million. The property developer also reported strong cash flow and said its balance sheet was strong to withstand the uncertainty of Covid-19. CNBC Africa spoke to Calgro M3 CEO, Wikus Lategan and asked if he was concerned about the 50 per cent plunge in the share price on the day the company released its annual results.
Mon, 18 May 2020 15:32:49 GMT
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AI Generated Summary
- Calgro M3 reports a substantial increase in annual revenue for its memorial parks business, defying the Covid-19 downturn.
- The company showcases robust cash flow and a strong balance sheet, underpinned by prudent financial management strategies.
- Calgro M3 navigates the challenges posed by the pandemic through diversified revenue streams, minimal rental discount requests, and contingency plans for potential burial capacity constraints.
Calgro M3, a property developer, has reported a significant growth in its memorial parks business, with annual revenue soaring over 22 per cent to R25.7 million. Despite a 50 per cent plunge in the share price on the day the company released its annual results, Calgro M3 CEO, Wikus Lategan, remains confident about the company's outlook. He highlighted the strength of the company's balance sheet and cash flow, emphasizing that they are well-positioned to weather the uncertainty brought about by the Covid-19 pandemic. The company's financial position has been bolstered by prudent liquidity management and cost-cutting measures. Lategan noted that cash flow preparations have increased by nearly 60 per cent, with cash resources also surging by over 108 per cent. Additionally, Calgro M3 has successfully generated a net profit of R195 million in the last year, marking a turnaround from previous years of investment and losses. The Memorial Parks business, deemed an essential service, has continued to thrive during the lockdown period, providing a steady stream of cash flow for the company. While the traditional pre-sales revenue stream has dwindled, strong cash sales have helped sustain the business. The company has over R100 million in cash flow available, along with undrawn overdraft facilities in excess of R100 million, positioning them well to navigate the current challenges. Discussions on potential rental discounts with tenants have been minimal, reflecting the stability of the rental portfolio. Calgro M3 has diversified revenue streams, with completed properties ready for transfer, ensuring a continuous revenue stream even in extended lockdown scenarios. Lategan remains optimistic about the outlook for the memorial parks business, citing an increase in market share and sustained growth even without pre-sales. The company has strategically positioned itself to handle a potential spike in Covid-19-related fatalities, with contingency plans in place to manage any challenges around burial capacity. While concerns about mass burials have been raised, Calgro M3 is prepared to maintain dignity in the burial process and ensure sustainability in the face of evolving circumstances. By focusing on market share growth and operational resilience, Calgro M3 is well-equipped to withstand the ongoing crisis and emerge stronger in the long run.