Iliad Africa has sold its timber wholesale business to York Timber for R45.5 million and achieved a turnaround to profit in the year to last December. This follows a rationalising and rebranding of some stores and the rationalisation of its retail subdivision
Eugene Beneke, the chief executive of the listed building materials supplier, said yesterday that the decision to sell the firm’s timber wholesale business followed the ongoing review and optimisation of its portfolio.
He said the sale price was the net asset value of the business and the proceeds of the transactions would be used to fund working capital requirements and future growth.
The deal includes Timber Wholesale’s Thorpe Timber in Germiston, a maker and wholesale distributor of timber, and Timber Preservation Services in Cape Town, which operates a timber value adding, treating and wholesale distribution business. The transaction is subject to the approval of the competition authorities.
Yesterday Iliad reported a significant improvement in earnings a share to 24.3c in the year to December from a loss of R1.749 in the previous year.
The company did not incur any restructuring costs or impairments in the reporting period compared with R52.5m in once-off restructuring costs and R249.5m in impairments related to its Thorpe Timber and National Tile Traders businesses in the previous year.
Headline earnings a share advanced by almost 390 percent to 46.3c, while group revenue rose 6 percent to R4.49bn.
Beneke attributed the increase in revenue to a strong performance by the general building materials division, saying the performance of the rest of the group reflected the continued subdued trading environment, marginal recovery in building plans passed and the protracted slowdown in the finishing end of the industry.
Operating profit before finance charges improved to R93.5m from the operating loss of R210.4m in the year before.
An unchanged dividend of 20c a share was declared.
Beneke said the strategy developed after reviewing Iliad’s business during the financial crisis was steadily unfolding, underscoring the company’s evolution towards sustainable growth.
He said two of the most important strategic projects last year were the implementation of the BUCO brand in the general building materials division, resulting in the replacement of many regional brands with one brand, and installing a new information technology (IT) platform in its stores.
The implementation of the BUCO brand had exceeded all expectations and to date the company had invested about R50m in rolling out the name. This includes store refurbishments, while the migration to the new IT platform was on track to be completed by the middle of next year. It was expected to provide economies of scale, improved business information and procurement benefits, Beneke said.
The challenging trading environment was set to continue this year but the group’s strong foundation would support continued growth, Beneke added. “Any acceleration in the recovery in building plans passed will reinforce this growth.”
Iliad’s stock slipped 2.97 percent to close at R4.90 yesterday.