 |
Italtile cements growth trend - 12th consecutive year of earnings improvement
Johannesburg, 06 August 2003: Italtile Limited, trading through national branded retail chains, CTM, servicing the value-for-money market, and Italtile, which caters for the premium-end market, has delivered its twelfth consecutive year of real earnings improvement. The company is South Africa's leading retailer of ceramic tiles, sanitaryware, bathroom accessories and other related products, and is one of the major purchasers of tiles globally. For the year ended 30 June 2003, turnover for the group was R1,36 billion, an improvement of 25% (2002: R1,09 billion). The contribution derived from group owned stores increased to R749 million, up 21% (2002: R620 million), while turnover from franchises grew 30% to R609 million (2002: R470 million). Trading profit improved 29% to R166 million (2002: R129 million) in line with expectations, and headline earnings per share increased 27% to 657 cents (2002: 518 cents). A final dividend of 80 cents has been declared, which together with the interim dividend of 50 cents produces a total dividend of 130 cents (2002: 100 cents), an improvement of 30%. Chief Financial Officer, Peter Swatton, says: "Turnover growth was derived almost exclusively from existing operations, validating management's belief that sustained growth in tile consumption is a certainty in South Africa. In line with global trends, expansion is predicated on increasing recognition of the product as the most durable, hygienic and cost effective wall and floor covering." He noted that whilst the latter half of the review period proved less satisfactory than the first half, management was confident that conditions would improve as the positive effect of interest rate cuts on consumer spending begin to filter through. Swatton adds: "Notwithstanding the testing environment, the group was successful in entrenching its leadership in the ceramic tile market and pursuing the strategy of extending its sphere of operation to include the tap and sanitaryware market. Traditionally perceived as a specialist tile retailer, growing consumer demand for improved convenience influenced the company to expand its product range under one roof, and boost its offerings of tap and sanitaryware products." "Consumer response has been extremely positive, and consequently, all new stores will be modelled to include a dedicated bathroom division - in effect offering a shop-within-a-shop concept," he says. Swatton comments: "The group's operations which include franchises, joint ventures and empowered franchises, all have as key tenets entrepreneurship and empowerment and display the benefits associated with owner-driven businesses, backed by high quality company systems and support structures." A further four group owned Italtile stores and 10 group owned CTM stores were converted to the joint venture model, reducing the number of stores the company owns to 11, in line with the goal to entrench its role as a franchisor first and foremost. In light of the challenging environment, improved stock management comprised a critical strategic thrust, resulting in a variety of benefits and contributing to an increase in the group's cash and cash equivalents to R158 million. These reserves will be used to fund future expansion both locally and internationally. Property PortfolioGroup owned and franchised stores operate out of purpose built company-owned premises situated in highly visible, prime locations appropriate to the targeted market segment. A further R34 million was invested in property during the current year bringing the value of the property portfolio to R246 million. As this portfolio enhances trading performance, the group will continue to invest in property on an ongoing basis. African OperationsBoth the CTM and Italtile divisions reported satisfactory turnover and profit achievements within their respective niche markets. The company trades out of a total of 85 stores in Africa. ItaltileThe strategy of consolidating Italtile's presence in major urban areas in order to best present a comprehensive product range in a single location is complete. The Italtile brand is now represented through eight stores situated country wide. Despite having fewer stores in its portfolio, the Italtile division maintained its prior year turnover levels, whilst improving profitability on the back of reduced overheads. Italtile will continue to deliver uncompromising quality in the premium end of the market. CTMCTM continues to enjoy strong brand recognition in both the developed and developing markets. The division is represented through seven company owned stores, 53 franchised stores, 10 joint venture stores and seven empowered franchises. CTM grew turnover by 31% in the current year having made inroads into the tap and sanitaryware markets. Margins remained firm with no real growth in overheads. CTM's practice of bringing competitively priced product within arms' reach of the mass market is proving particularly effective in the sub-Saharan region. Outside of South Africa the company currently has franchised operations in Botswana, Namibia, Swaziland, Lesotho, Malawi and Tanzania. The brand's reach was extended with the opening of a further store in both Malawi and Tanzania, and the successful opening of the first store in Zambia. It is anticipated that CTM will have a presence in Uganda within the coming year. The group is confident that enormous growth opportunities exist in these and other African countries. International OperationsItaltile's Australian operation, comprising nine CTM stores across Queensland, New South Wales and Victoria, delivered a 27% growth in turnover and a satisfying increase in profits for the full year. Key to this trend has been the adaptation of the CTM trading formula to meet Australian consumer requirements. A programme of further store expansion will commence towards the end of the forthcoming financial year. The Australian operation currently contributes around 10% of total turnover and is expected to become an increasingly important contributor to the group's performance. The Italian operation delivered consistently, and continues to make a useful contribution to group turnover. ProspectsSwatton concludes: "We anticipate that trading conditions in the South African market will be buoyed by further interest rate cuts leading to enhanced consumer spending. The group's expansion will largely be governed by sourcing suitable franchisees and joint venture partners for the various markets. Management is satisfied that its focus on core business will continue to deliver growth in earnings." ends Issued by Signatures Investor Relations on behalf of Italtile LimitedFor further information contact:
|
