ILIAD Africa’s internal efficiencies, improving costs and implementation of various portfolio adjustments had offset the impact of slow growth faced by the building industry, the building materials distributor said yesterday.
The group, which owns Buco stores, said the building material industry was facing a challenging period as householders spent less on refurbishments and building plans.
However, following the group’s portfolio adjustment programme last year, “things are getting back to normality”, Iliad chief executive Eugene Beneke said yesterday.
The group was able to increase revenue from comparable stores by 4.6 percent to R2.1 billion for the six months to June. Earnings a share came in at 30.3c compared with a loss of 39c in the corresponding period last year. Headline earnings a share grew to 30c from 0.4c a year earlier.
“The improvement in earnings reflects the continuing benefits of the group’s portfolio adjustments made in 2013,” Iliad said.
Iliad’s general building materials division increased revenue by 4.9 percent while sales at its specialised building material unit improved by 9.9 percent.
Beneke said Iliad was comfortable with the fact that the group was able to combat industry inflation, which was sitting at between 4 percent and 4.5 percent
He said the 4.6 percent comparable-store growth showed marginal real growth and reflected the fact that the market remained very competitive.
Iliad was finding its feet with the new structure of the business after a major restructuring programme last year, which included disposing of three of its operations.
“The significant improvement in our earnings in the main is as the result of being through the benefits of the portfolio adjustments,” he said.
Iliad has a national footprint and will open two new stores before the end of the year.
“The implementation of various key strategic initiatives have ensured that the Iliad group is well positioned to capitalise on opportunities as growth gradually returns to the market. We are confident we will achieve our targets at the end of this year,” Beneke said.
Iliad’s target was to deliver headline earnings a share of between 39c and 40c.
36One Asset Management equity analyst Jean Pierre Verster said Iliad’s results might not have met the group’s internal targets but they were a “return to normality”.
Verster said the improvement in profit should be looked at from a comparative period angle where the company reported very weak results for the first half of last year.
“This period has been a return to normal for them, but because of a very tough environment the performance has been a bit disappointing.”
The introduction of the Buco brand made Iliad more recognisable to customers, who could now connect the dots between television and print adverts and the local store.
However, Verster pointed out that it was the group’s specialised building material division’s significant improvement and the fact that the group did not have the restructuring costs incurred in the comparable period that underpinned the good growth.
Iliad shares fell 10.74 percent to close at R7.40 yesterday.