CAPE TOWN – Trellidor Holdings was hurt by sliding consumer spending in the South African middle-income market and headline earnings a share fell 26.2 percent to 40.1 cents per share in the year to June 30.
Earnings were also hurt at subsidiary Taylor, a maker and distributor of mainly aluminium blinds, decorative and security shutters, particularly in the Western Cape, where it derives some 62.2 percent of sales.
However, chief executive Terry Dennison said in a presentation that the group was now far more streamlined than before and was well positioned with spare capacity to outperform, should the economy start improving.
Revenue fell 4.5 percent to R515 million in 2019. A final gross dividend of 11.1c, versus 16.2c in 2018, was declared. Dividends for the full year decreased by 25.7 percent to 20.2c per share.
Outlining some of the prospects for the 2020 financial year, he said share buybacks would continue.
There was ongoing research into potential acquisitions, possibly also of underperforming franchises, following the success of the acquisition of the Durbanville franchise.
The focus at Taylor was margin improvement and tighter controls. The geographic expansion of Taylor through Trellidor’s network would continue.
A sales force had been deployed to further penetrate the non-residential market.
For the Trellidor segment, the Ghana business model – where 43 percent revenue growth was reported in the past year – was being replicated for other East African operations. New franchises had been signed in Uganda and Rwanda, part of ongoing expansion in other African markets.
In the UK, where sales more than doubled in the past year, growth was expected to continue.
In addition, a cost-cutting programme, which yielded R6.2m of savings in the past year, was expected to continue to yield benefits for a full year in 2020.
Dennison said they did not expect the local economy to improve much in the year ahead. There were tentative signs of a bounce back in the higher income residential market in the Western Cape.
Group revenue decreased by 4.5 percent to R515m. The gross profit margin of 45 percent was lower compared to the previous year's 45.6 percent, due mainly to an under recovery of an above inflationary increase in labour cost, under recovery of semi-variable costs and higher imported material costs resulting from the devaluation of the rand against the US dollar.
Operating expenses increased by 5.9 percent year-on-year, which included the impact of investing in additional capacity.
Gearing was conservative at 35 percent, down from 55 percent in 2017. Some 2.13 million Trellidor shares were purchased for R9.1m from available cash and cancelled.
A further 477 247 shares at a cost of R2m were bought subsequent to year-end.
The Ghana operation increased revenue by 43 percent and the UK franchise had built on its strong performance reported at half-year, closing 2019 at 112 percent up from 2018.
Trellidor's share price closed 2.38 percent lower at R4.10 on the JSE on Monday.