Story highlights:

* African expansion and retail division to boost growth of the South African steel merchant.
* The company aims to achieve ISO 9001-accreditation in early 2012 and is installing a R15-million, 1 600 mm heavy-duty slitting line and a high-definition plasma machine.

AltX-listed steel merchant BSi Steel is introducing new products and services to the retail market in South Africa and is also expanding its African and South African presence to boost its growth, says BSi Steel CEO Grant Mackenzie.

Its half-year results showed a 12% growth in revenue to R1.067-billion, gross profit growth of 45% to R199-million, earnings before interest, tax, depreciation and amortisation growth of 64% to R81.4-million, headline earnings growth of 116% to R46.9-million and it paid a dividend of 2c a share.

“BSi Steel is now a holistic steel supplier to the market. Our mini-merchants, or retail merchants, will handle about 500 t to 1 000 t a month of steel and are aimed at improving our exposure to the South African market,” he says.

The company has moved from being a volume-driven player that leveraged economies of scale and aggressive pricing to retain its market share to where it is now looking to improve the quality of its services and processes, specifically around the end-use applications of the steel products by customers, to ensure that the 20% of its clients that provide 80% of its revenue remain satisfied.

“We are growing our product offering while expanding our geographic footprint. We are also increasing our exposure to the South African branch network and Africa, where we believe continual growth will have a multiplier effect in the future,” said Mackenzie.

He mentions that BSi Steel will roll out its retail merchants, under the brand BSi Express, in South Africa at a rate of three to four each year.

A Brits branch, in the North West, will be opened early next year with the East Rand and West Rand branches in Gauteng to follow.

“We also opened a branch in Ghana, which we are bedding down at the moment, and we see big opportunities in Tanzania, Ethiopia, Kenya, which is key to the East African market, and landlocked countries,” he says.

The company’s four specialised divisions, coil processing, roofing, specialised steels and service centre, help to supply Africa from a central distribution centre in Gauteng. The company also has nine branches in Africa.

“We are an Africa-focused company. We target countries based on their gross domestic product and their likely growth and pick markets that have the scale to support consistent demand and also upside opportunities for growth,” explains Mackenzie.

The company aims to be a holistic steel supplier to Africa and South Africa, and use its strong presence in Africa to harness opportunities arising from mining, oil and infrastructure developments on the continent.

Further, BSi Steel COO Jerry Govender says the service offered by the group’s company Shearcut, which handles the coil processing for the group, is geared to meet the technical requirements related to the end-use applications of the products.

“Quality is vital for us and we have a formal quality management system aligned to ISO 9001 and in early 2012 we will be ready to achieve ISO 9001-accreditation. We have a specific focus on the training of our employees and formal process controls are important to maintain productivity and service levels to our customers,” he notes.

The company is also installing a new R15-million, 1 600 mm heavy-duty slitting line that is in the construction phase.

This will increase its capacity from 3 000 t to 7 000 t and reduces the supply risks for customers, reduces lead times and enables flexible delivery.

“For a business to grow in our industry, it has to increase its product range, services and footprint. We are using all three methods,” says BSi Steel Service Centre divisional head Sampie van Rooyen.

“We have a good and broadening Africa presence, we are increasing our product range and my job is to introduce a specialised product range, specifically quench and tempered steels, and services,” he adds.

The company will also introduce a 400 Brinell hardness steel and will introduce 450 and 500 Brinell hardness steels next year.

The service centre will profile-cut, drill, bend and roll steel plates to specific customer requirements.

“We have installed a high-definition plasma machine and will add this capability to oxyfuel cutting, and laser cutting. This is to bring in the new product range and to add value to downstream applications,” says Van Rooyen.

The company aims to have its products used by manufacturers, fabricators and the mining industry, concludes Van Rooyen.

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