Trellidor Holdings increased headline earnings more than 100% to 36.1 cents a share in the year to June 30, compared with 4.2 cents the prior year.
Notwithstanding the strong increase in earnings, the directors said that because of high debt it was decided not to pay out a dividend. Revenue increased 12.6% to R565.8 million. Earnings a share increased by more than 100% to 36.1 cents per share, from 3.7 cents the prior year.
The directors said they would revert to paying dividends once borrowings had normalised. Net cash from operations was R51.1m versus R20.2m, excluding a Labour Appeal Court settlement, reducing net debt by R31m, or by 21.1%.
Operating profit increased robustly to R62.5m from R21.9m. Finance costs increased to R20.77m from R18.23m. Taxed profit increased to R34.7m from R3.5m.
In the Trellidor segment, revenue increased 22.6% to R404.2m driven by a strong performance by the UK division, which offset the weak demand in South Africa.
The factory throughput of the company’s traditional Trellidor type products made up 64%; burglar bars 2%; the Rollerstyle product set 7%; security screens 13%; and, the aluminium louvre shutters contributed 14%.
Demand for Taylor’s decorative blinds and shutters products was muted and revenue fell 5% to R133.2m, with operating profit at R2.5m from R3m last year.
Similarly, NMC’s revenue decreased 11.2% to R29.7m and operating profit declined to R900 000 from R3.3m.
Some challenges in the domestic market included weak demand, with low levels of disposable income; high interest rates that had peaked; import supply chain lead times that had stabilised, but remained extended, which was putting pressure on inventory levels; and, high metals prices that had started to decline.
Labour wage negotiations were successfully concluded in May without industrial action. The industry and labour union have a new three-year wage agreement.
CEO Terry Dennison said in a presentation that the first interest rate cut for the year, announced two weeks ago, was positive in that it reduced the cost of debt and provided some good news to the domestic market. In addition, inflation appeared to be under control, which will support further interest rate cuts and free up some disposable income.
In the local market, the focus for the new financial year would be to continue to cut debt, improve working capital management, cost reduction, optimise revenue generation domestically and leverage revenue growth opportunities abroad.
The company grew in its Africa markets in the past year, but shortages of foreign exchange in certain territories constrained sales in those territories.
The UK had shown significant growth in the past year, due mainly to contract work received. The normalised UK market continued to grow, albeit at a slower pace.
Dennison said the focus on Africa would continue on a low capital, low risk basis. Opportunities for growth in the UK on a sustainable basis had been identified and resources were in place to develop this market further.
BUSINESS REPORT