Flooring and chemicals group Accentuate managed a successful turnaround for the financial year ended June 30, recording a modest R7.5-million profit, up from a R74.6-million loss in the previous year.
Revenue increased 13% to R283-million.
“I think we saw a return to our roots, to our core business, in the past year. Hopefully we have set a strong foundation for normalised earnings going forward,” said Accentuate CEO Fred Platt on Thursday. “From a macro perspective, we have dealt with all the outstanding issues.”
One of these issues was the costly acquisition and subsequent disposal of Centurion Glass and Aluminium.
Platt added that the depressed construction sector appeared to be gaining momentum.
“An important feature of these improved results has been a slow, but consistent rise in construction industry activity.”
Platt said the FNB/BER Construction Confidence Index showed that confidence in the sector had increased for three consecutive quarters to a level of 38 points.
Capital spending by provincial governments, as at March 2012, was on average 21% higher year-on-year and a recent report on non-residential building plans passed showed a steady increase on last year.
By contrast, municipalities were still struggling to meet their spending targets, with only 41% of their capital expenditure budgets spent in the first nine months of the year. In addition, construction in the private sector remained severely depressed.
“Overall there is a more positive outlook for the construction sector – despite the uncertainty around the struggling European economy and its effects on the local economy,” said Platt.
Once again Floorworx was the big earner for the Accentuate group, with revenue at R217-million, compared with last year’s R185-million.
Platt said the flooring environment remained challenging, but noted that the focus on extracting synergies between Floorworx and Accentuate’s chemicals and adhesive company Safic, as well as expanding the range of products they offered to the market, appeared to be paying off.
However, volatility in the currency markets and fluctuating commodity prices were causing some challenges in managing input costs.
Safic increased revenue to R71-million.
Safic’s focus would remain on growing its presence in the market and adding to its supply of adhesive and cementitious products to Floorworx.
A number of new products and product enhancements were also being launched, said Platt, starting in October.
During the year under review, Accentuate signed an agreement with Indian water treatment company, Ion Exchange India, to supply a range of water treatment solutions to the South African market.
Ion Exchange Safic began trading on July 1 and was 60% owned by Ion Exchange India, with the remaining 40% held by Safic.
“The joint venture has settled in nicely. It is a term project, however, and will take time to bed down. The impact will only be felt in the next financial year,” noted Platt.
Looking ahead, he said Accentuate was mulling the launch of new products into existing markets, collaboration with other companies in sectors where the group was already operating in, as well as, possibly, some acquisitions.