Deteriorating economic cycles in the manufacturing and construction industries have seen the Accéntuate group report an 8.4% drop in revenue for the year ended June 30, compared with the previous financial year, to R308-million.

Profit for the year was 42% lower at R5.1-million.

The Accéntuate group serves the South African construction, mining, chemicals, infrastructure development and water treatment markets.

“Following exciting developments at the time of completing the previous financial year, including the FloorworX sixtieth anniversary promotions and the acquisitions of Suntups and Degrachem, it would have been virtually impossible to have foreseen how difficult the coming financial year would be for the Accéntuate group,” says CEO Fred Platt.

“The economic cycles for the manufacturing and construction industries continued to deteriorate beyond initial expectations.”

Other factors also contributed to make the year “incredibly challenging”. These include prolonged industrial action in a number of sectors supplied by the group and lack of government spending, as well as “severe upward price pressure” on many raw materials and fuel prices.

Platt says Accéntuate’s fuel bill was R2.5-million over budget in the past financial year. Many of its products also require petroleum- derivative inputs.

The FloorworX division contributed 76% of group revenue.

The lacklustre trading conditions experienced by this division continued throughout the year. The market also saw price and margin pressures and increased competition, but Accéntuate managed to hang on to its market share, says Platt.

The environmental solutions division comprises the Safic business operations and contributed 24% of group revenue during the year under review.

Safic faced a continued slowdown in its major markets – the manufacturing and mining sectors –compounded by industrial action, the volatility and relative weakness of the rand and the impact of administered cost increases.

Accéntuate’s water treatment division comprises the Ion Exchange Safic water treatment business, which is a partnership between Accéntuate, Safic and Ion Exchange India.

The division secured a number of projects, including the supply of a drinking-water plant and water-recycling plant, while also gaining a number of clients in the food and beverage sector.

Platt says Accéntuate remains positive about its business model, despite facing a number of “serious macroeconomic challenges”.

He believes government spending should start filtering through to the market, even though he is not sure when this will happen.

Facing this uncertainty, Accéntuate has diversified into the commercial flooring market, where it previously had little “aesthetically pleasing products”.

However, the Suntups acquistion helped to improve this situation, while Accéntuate has also introduced its own, made-in-South Africa carpet tile.

The group is also looking towards Africa, and selling its products on the continent through distributors or agents, or establishing hubs in selected countries.

“We are looking at what else we can manufacture at our East London plant,” adds Platt.

“We are trying to manage the costs we have control over.”

In terms of water treatment projects, the Accéntuate joint venture is looking for that one big elusive contract that will place it on the map in terms of building, operating and managing water supply and treatment plants.