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Aug 31, 2012

Ceramic Industries sees big drop in FY earnings

Fashionable Product|Higher Value Products|Manufacturing|Manufacturing Capacity|Product|Products|Operations
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JSE-listed sanitaryware, floor and wall tiles manufacturer Ceramic Industries on Friday reported that the group’s operating profit for the year ended July was expected to be between 32% and 35% lower than the prior comparable reporting period.

Headline earnings per share are expected to be between 21% and 24% lower and basic earnings per share could fall by between 14% and 17% year-on-year.

“Despite the fact that record sales volumes were achieved during the period, profitability was reduced as a result of above-consumer-price-index input cost increases and a deliberate strategy in the first half of the year to contain product price increases to combat price pressure in the local market,” the company said in a statement.

Ceramic noted that its Australian tile operations business Centaurus continued to underperform. “Inability to deliver consistently high-quality fashionable product eroded the division’s customer base and the resulting underuse of manufacturing capacity impacted on production costs,” it stated.

The implementation of remedial measures in the operation during the period failed to effect the urgent turnaround required. The division reported an operating loss of R44.7-million for the period.

Meanwhile, its sanitaryware division improved on the sound performance delivered in the prior year, despite subdued market conditions.

Production and sales volumes increased in the review period, while intensive cost containment and increased sales of higher-value products resulted in an improved margin.

The group's results for the year would be published on September 6.

Edited by: Mariaan Webb
Creamer Media Senior Researcher and Deputy Editor Online
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