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Italtile achieves R1 Billion turnover milestoneHighlights
Johannesburg, 07 August 2002:: In financial year 2000 Italtile Limited announced its strategic intent to realise annual turnover of R5 billion by the end of the current decade. The group has achieved a significant milestone towards attaining that goal, and successfully extended its market leadership, by delivering turnover of R1.1 billion (2001: R788 million) for the year to 30 June 2002. Peter Swatton, Chief Financial Officer, says: "The group's enhanced turnover growth - derived primarily from existing operations - substantiates management's view that the South African ceramic tile market still affords significant growth opportunities in both the developed and undeveloped sectors of the market. We are confident that in line with global industry trends, further expansion can be anticipated based on the product's accessibility and acceptability to all sectors of the market and furthered by its status as the most cost-effective, most durable and most hygienic wall and floor covering." The company projects that South Africa's current tile consumption of 30 million mē per annum will swell to 35 million mē per annum by June 2003, with further sustained growth predicted over the long term. This projection is supported by comparative research conducted in Brazil and Indonesia - countries which evince market conditions similar to South Africa - which reflects per capita consumption in excess of 1.5 mē compared to South African consumption of approximately .75 mē per capita, and illustrates the development potential of the local industry. The period under review featured relatively buoyant trading conditions, says Swatton, which assisted the company to deliver its eleventh consecutive year of earnings improvement. Trading profit increased by 57% to R129 million (2001: R82 million), while headline earnings per share improved by 64% to 518 cents (2001: 317 cents). The balance sheet reflects cash reserves of R92 million, which will fund future expansion. A final dividend of 65 cents has been declared, which together with the interim dividend of 35 cents, produces a total dividend of 100 cents (2001: 60 cents), an improvement of 67%. Swatton comments: "Central to turnover growth was enhanced entrepreneurial interest in the business. This reporting period featured consolidation of the company's long-term strategic goal to empower and energise individuals at every level of the business and evolve the organisation structure from predominantly group-owned stores to franchised stores. This strategy is based on the group's philosophy that there is no substitute for owner-driven businesses and respects the improved responsiveness with which franchises react to a changing market." The group's three franchise-linked vehicles: 100%-franchises, joint venture franchises and black empowered franchises all performed well and afford important expansion opportunities. Judicious investment in stock holding was made in the last quarter of 2001, a strategy which paid off handsomely. "In the industry context of reduced import activity resulting from the devaluation of the Rand, the company was able to capture a sizeable portion of the market by meeting demand. This afforded the group inroads into new markets, and served as a driver of profits," says Swatton. Property PortfolioGroup-owned and franchised stores operate out of company-owned premises situated in highly visible, prime locations, positioned to support group brands. The group invested a further R50 million in property during the period under review, increasing the value of the portfolio to R212 million. Swatton notes that the company will continue to invest in property given this portfolio's contribution to profits. African OperationsBoth the CTM and Italtile divisions reported pleasing growth, with the company growing market share in the value-for-money and premium-end sectors respectively. The company trades out of a total 85 stores in Southern Africa. Based on the leverage afforded by the company's standing as the leading global purchaser of ceramic tiles, both divisions succeeded in restricting price increases to below the industry norm. ItaltileItaltile continued to entrench itself as the first-choice purveyor of high quality product in the premium-end market. The product range continued to be carefully refined in recent months and significant growth is anticipated in this niche of the market. The Italtile brand is represented through three company-owned stores, one franchised store and seven joint-venture stores. CTMPrudent purchasing ensured that the division remained receptive to consumer appetite and continued to offer access to customers across the spectrum. The CTM Super Store, situated in Fourways and scheduled to commence trading in August, is representative of the group's vision to upgrade and enlarge stores to reflect an aesthetically enhanced shopping experience without losing sight of offering value for money. "CTM experiences strong brand awareness in rural areas and we intend capitalising on the extensive growth opportunities afforded," says Swatton. North of South Africa, the division's presence extends to Botswana, Namibia, Swaziland and Lesotho, with the fledgeling operation in Tanzania delivering good returns. Further expansion into Africa is anticipated with the establishment of stores in Malawi and Zambia. Management is of the opinion that the Southern African region affords important opportunities to entrench the CTM brand and develop the market. The CTM brand is currently represented by eight company-owned stores, 52 franchised stores, five empowered franchise stores and eight joint-venture stores. "Pursuant to the group's strategy to position itself as a franchisor first and foremost, the intention is to continue to reduce the number of company-owned stores," notes Swatton. International OperationsIn Australia the group trades out of nine stores situated in the states of Queensland, New South Wales and Victoria. Swatton comments: "We were successful in our undertaking to turn the operation around from a loss making position to deliver a respectable profit, which we deem to be sustainable over the long term." With continued fine-tuning of the trading concept, it is anticipated that the Australian operation will become a major contributor to the group's growth strategy. ProspectsSwatton concludes: "Our ambitious long-term growth strategy will be facilitated by the positive trading conditions anticipated in the medium term and the potential offered by the African and international operations. We are satisfied that with continued focus on core business the group will deliver satisfactory results for shareholders." ends Issued by Signatures Investor Relations on behalf of Italtile LimitedFor further information contact:
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