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Italtile bolsters successesJohannesburg, 13 February 2002: Italtile Limited, South Africa's leading retailer of imported and local ceramic tiles, sanitaryware, bathroom accessories and other related products, has announced gratifying results for the six months ended 31 December 2001. Trading through two branded national retail chains, CTM and Italtile, the group reported turnover of R533,2 million, an improvement of 31% over the prior comparable reporting period (2000: R407,4 million) Trading profit increased 35% to R50,1 million (2000: R37,0 million), while headline earnings per share improved 33% to 191 cents (2000: 144 cents). An interim dividend of 35 cents has been declared, an increase of 21% (2000: 29 cents). The group remains ungeared, with the balance sheet reflecting cash reserves of R92 million. Peter Swatton, Italtile's Chief Financial Officer, says: "A significant portion of turnover growth continues to be derived from established operations. We believe that the ceramic tile market in South Africa is still evolving and offers potential in both the developed and undeveloped sectors of the market." Margins firmed during the review period and cost control remains a continuous focus. "The fact that Italtile is the largest global purchaser of ceramic tiles affords the group a competitive edge in securing the best product at the best prices. In our procurement activities we are consistently vigilant in the search for enhanced value in new products and markets," he adds. African OperationsBoth CTM and Italtile produced sound results based on an ongoing programme of in-store enhancements and system improvements, complemented by improved product mix. Swatton notes: "CTM continues to be the brand of choice in the value-for-money segment of the market, evidenced by the division's sound results for the period. Italtile's position as the fashion leader in the premium-end market demands that the division secure leading-edge product for discerning customers, and we foresee considerable potential in this market segment." He adds: "The group's strategy of holding stock to support forward sales proved prudent, given the sustained high demand for product and the general shortage of stock in the country at present." During this reporting period, the group launched an empowerment vehicle, consisting of 50/50 partnerships between existing franchisees and black partners, aimed at increasing black ownership in the company, while ensuring mentoring and skills transfer. Swatton notes: "Strong growth is projected from this franchise vehicle, with significant opportunities forecast in the short-to medium term." The group currently trades out of 16 group-owned CTM stores, 44 franchised CTM stores, four empowered franchise stores and 11 group-owned Italtile stores. The company is represented in South Africa, Botswana, Namibia, Swaziland, Lesotho and Tanzania. Further expansion into Africa will be realised with the introduction of operations in Malawi and Zambia, scheduled for 2002. The group made supplementary investments in its property portfolio, bringing the value to R199 million. The highly visible, company owned store locations are situated in prime positions and serve to support group brands. CTM's first Super Store will be located in Fourways, Johannesburg, and is expected to be trading by mid-2002. International OperationsHaving completed the first phase of penetration of the Australian market, namely creating and establishing brand presence, and consolidating operations, the company reported a modest profit. Swatton says: "We are confident that profitability is sustainable and are positive about the growth potential of that market." The group has nine stores across Queensland, New South Wales and Victoria, and while no further stores will be opened during the current year, management is considering franchising certain of the operations in due course. ProspectsItaltile will be launching a joint venture element to enhance its existing franchise model, aimed at adding value to the business while encouraging entrepreneurship. Negotiations have been finalised to convert existing group owned stores to this model, and by June 2002, it is anticipated that two CTM and three Italtile joint venture franchises will be operational. Swatton notes: "The group has been a major franchisor for some time now, and our long term goal is to ensure that the bulk of the business vests in the hands of franchisees. This strategy is centred on the improved responsiveness with which franchisees react to a changing market." Swatton concludes: "While we anticipate that the trading environment will remain challenging, exacerbated by the unfavourable exchange rate, we are satisfied that with continued focus on core business, we should be able to deliver steady growth." ends Issued by Signatures Investor Relations on behalf of Italtile LimitedFor further information contact:
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