Trellidor, which makes and franchises barrier security products, blinds as well as decorative and security shutters, yesterday reported a “solid performance” for the six months to end-December 31, 2018, even though consumer spending was lower throughout South Africa and Africa, particularly in the middle-income market.
The share price rose by up to 4.2 percent to 370cents after the results were released yesterday, but the price is still well short of the 573c it traded at in July last year. At the beginning of March the share price was 400c.
The Taylor Group subsidiary was fully exposed to the decline in consumer disposable income, particularly in the Western Cape through 2018.
Trellidor Holdings revenue fell 4percent to R286million. The gross profit margin fell to 45percent from 46percent due mainly to increased material costs, under-recovery of variable expenses and above inflation wage increases.
Taxed profit fell 17percent to R33m, while earnings a share declined by 15 percent to 29.8c. Net cash from operating activities increased by 3percent to R25m.
The group repurchased 642705 shares during the six month period, funded out of cash resources, and further share buy-backs were planned. Revenue had declined by 2percent, but international sales grew 9percent underpinned by a strong performance in the UK where projects were started for stations in the London Underground. This was partially offset by the weaker performance in southern Africa.
A shift efficiency project had reaped benefits in the first half, and savings were expected to accelerate in the second half. At the Taylor Group gross margin declined to 40.8percent from 43.9percent.
Reduced sales volumes led to the company being overstocked at the end of the interim period, yielding an opportunity in the second half to recover the cash absorbed in the first six months. “Projects focused on material supply and efficiency enhancement are expected to gather momentum and yield further savings,” the directors reported.
Sales growth strategies were in progress and the geographic expansion of the Taylor business was progressing, with sales through the Trellidor franchise base growing 158 percent over the corresponding period in 2018.