BSI STEEL - SA Shares

BSI STEEL

BSI Steel Holdings Limited. JSE: BSS

Background

BSI Steel Limited is a South African JSE Alternative Exchange listed group of companies with strong ties to the greater Southern African market. BSI Steel’s corporate office is located in the city of Johannesburg in Gauteng. The company’s primary product range includes mild (carbon) steel in all its different forms. The company was established in 1985.

BSI Steel has a number of subsidiary companies namely BSI Steel Africa (sub-subsidiaries BSI Steel Ghana‚ BSI Steel Mozambique‚ BSI Steel Zambia and BSI Steel Katanga SPRL)‚ BSI Specialized Steels‚ Newcolab‚ Red Chip Investments‚Shearcut‚ Brown McFarlane Africa and West Dunes Properties 296.

BSI Steel currently enjoys a R2.7 Billion turnover on trade with operations in 4 African countries. BSI Steel has a 23 hectare site to the South of Johannesburg that houses a coil processing division as well as 30,000 square metres of warehousing from where long and flat steel products are distributed across South Africa and across the African continent.

BSI Steel’ s SA Operation’s focus on servicing the Structural, Mining, Engineering, Manufacturing and Automotive Industries within South Africa. Its large Pietermaritzburg branch ensures customers have a comprehensive range of mild steel products whilst any bulk orders are in transit from BSI Steel’ s Gauteng Distribution Centre. BSI Steel Exports LTD coordinates external business directly from the group’ s Johannesburg facility. BSI Steel has 5 operations in 3 SADC countries outside of South Africa. This broad business presence is confirmation of the company’ s commitment to thoroughly meet steel requirements on a cost-effective regional basis. BSI Steel’ s branches are located in Zambia (Lusaka, Kitwe) and 3 Franchise operations are in the DRC (Prosteel Lubumbashi and Prosteel Kolwezi) and Zimbabwe (BSI Steel Harare). Having such a presence in these markets allows BSI Steel to distribute steel more effectively throughout the region. Itsprimary coil processing facility has two cut to length and blanking lines, and two slitting lines for the processing of hot rolled, cold rolled and galvanized steel coils. Shearcut is the group’ s specialist steel processing subsidiary. Brown McFarlane Africa, an entity under BSI Steel share portfolio supplies Steel Plate, Duplex Steel, Super Duplex Steel, Pressure Vessel Steel, Boiler Plate, Armour Plate, Quenched & Tempered Steel Globally and has been in operation since 2005.

Growth Drivers
BSI Steel’ s graduate development program has in terms of its history, through even to its current day provided huge value to the organization as well as its graduates. Young talent, with a focus on black female talent, is brought into the business to gain valuable work experience at the Johannesburg Stock Exchange listed company. It also allows BSI the ideal opportunity to select those talented graduates with the most potential to fill any possible vacancies, which may arise over the course of the year. The last trading year saw 5.6% of its SA based staff falling into the graduate development programme.

All staff have to face the annual “career guide” performance review of all their key performance areas. In the past year, the company worked hard on revitalizing this performance measurement data system, to ensure it aligns to their goal of a smart, simple and accurate mechanism to review staff and manager performance. Performance Management is one of the most important leadership functions in BSI Steel, with a view to improving performance and retaining talent. In order to remain competitive and stay abreast with current technology and be seen as an employer of choice, BSI Steel has recognised that it is of the utmost importance to strategically align skills development and training for all staff.

Much of their training budget is spent on the training of interns, bursaries for formal qualifications, health and safety training, leadership development, ERP system training and on staff in the lower echelons of the business who need adult education and skills training (AET) in order to improve their quality of life. The year ahead will be focused on training and development of all staff now that their restructuring exercise is largely complete. This is to ensure that their staff have the required product knowledge, sales skills and systems experience to service their customers according to the standards set in their behavior code. An online feedback exercise will be undertaken to align the vision, mission and behavior codes, core to the business requirements for the year ahead. There will also be renewed activity in terms of the company transformation strategy, feeding into an improved BBBEE scorecard by the end of the next financial year.

BSI has a world class distribution centre and steel processing facility in the south of Johannesburg

Its ERP and IT platform both in and outside South Africa, integrates the entire business like no other

BSI costs are scrutinized for any inefficiency, and eliminated if not delivering value BSI systems and processes are being constantly refined towards efficiency and ‘ keeping things simple’

BSI remuneration strategies are aligned towards profitability and return on investment

Investor Tip

BSI share price currently does not show positive buy forecasts and live trade echoes this reality. This is due to the fact that, even if the board records show that BSI Steel
Limited is solvent and liquid and is able to pay its debts in the ordinary course of business for the next 12 months.

The group authorised financial assistance. To the business value of R 1.2 billion. This is not encouraging for BSI Steel’ s share price, share portfolio, investor capital and any future dividends up to today.

Cash flows forecasts from operating activity were down more than 50% sending stock worth tumbling from R93.1 million to R46.5 million. The company alsocontinues to reflect a negative cash position on its balance sheet due to a sizeable bank overdraft, but this did improve marginally over the year.Conditions in the local steel industry are tough at the moment, with producers like Evraz and Vanadium currently in business rescue.

South Africa’ s other major steel producer, ArcelorMittal, has reported headline losses of R227 million and R224 million over the last two years. Leading to investors putting their shares up for sale. BSI does not produce any steel itself, but sources, processes and distributes it across most of Southern Africa. It has operations in South Africa, Mauritius, the DRC, Mozambique and Zambia.

Sector: Materials

Industry: Materials