Amap keen on takeover by Bidvest

inlsa

Amalgamated Appliances six months results - Revenue up 22.8 percent to R646.3 million with operating profits up 35.5 percent to R59.2 million - Amap said the stagnant economic growth and reduced consumer spending has not affected the strength of its brands as the group continues to grow market share in new categories.Photo by Simphiwe Mbokazi 3 2

Nompumelelo Magwaza

Amalgamated Appliances (Amap) chief executive Alan Coward believes that a takeover by Bidvest will grow the company’s brand footprint, as it will improve its supply chain and help it to attract new business.

Bidvest has offered R3.50 for each ordinary share it does not already own in the manufacturer and distributor of domestic appliances, and will support management in declaring a 30c a share dividend if the deal goes through.

Coward said yesterday that Amap’s board had reviewed the offer and had invited an independent expert to evaluate the company. The board believed the offer was fair and it would support the bid by Bidvest.

All of this had been put into a circular and would be sent to shareholders who would make a decision next month, he said.

“Because Bidvest is a very strong industrial company, if this deal went through, it will strengthen our supply and help us get new business on board, and I think we would love to work with such a credible companion on logistics so that we can explore new opportunities together,” Coward said.

Coward admitted that the trading environment has been tough, but said this had not affected the strength of the group’s brands, which include Russell Hobbs, Pineware and Remington, among others.

In the six months to last December, the group increased its revenue by 22.8 percent to R646.3 million, with operating profit up 35.5 percent to R59.2m compared with a year earlier.

Coward said the strong increase in revenue was due to an increase in local market share, a few acquisitions and some growth elsewhere in Africa.

“As a result of this growth we managed to leverage the business and increase the operating profit. We have managed to keep our expenses in line and we are absolutely delighted at our results.”

Coward said Amap was aiming to top R1 billion in revenue in the financial year to June. “This will be the first time in five years we achieved this mark after the restructuring of the company.”

He noted that the trading environment had been tough, especially in South Africa.

“Trading has been tough but everyone in the group has made sure that they focus on new deals and concentrate on the basics and our consumers.

“We have also made sure that our products were merchandised properly.”

He said the group’s previous investment in the quality of its products was also starting to pay off. “When times are tough consumers go for the products that they trust.”

He believed that Amap’s local market share had improved by at least 2 percentage points over this period.

Elsewhere in Africa, the company has seen buoyant sales in Zambia and Mozambique, and hopes to see more growth in Ghana.

He said while the economic outlook remained challenging, Amap’s strong portfolio of brands, combined with expected double-digit growth in the rest of Africa, would overcome the market threats.

“We plan to carry the momentum of market share growth forward and target further cost reductions for the remainder of this financial year,” he added.

Amap rose 1.39 percent to close at R3.65 yesterday.