Building materials provider Iliad Africa is starting to see the benefits of its portfolio adjustments over the past 18 months, CEO Eugene Beneke said on Tuesday, as the JSE-listed firm reported improved half-year financial results.
Headline earnings a share increased by 162.5% to 20.1c in the six months ended June, compared with a loss of 212.2c per share a year earlier. The comparable 2011 loss included one-off portfolio adjustment costs of R67.9-million and a R249.5-million impairment charge.
Revenue jumped 10% year-on-year to R2.18-billion in the six months, mainly owing to a strong performance by the inland and coastal regions of the general building materials division.
Beneke told Engineering News Online it was pleasing that for the second term in a row, trends were growing in a positive direction. “Iliad’s continued positive performance trend is owing to satisfactory revenue growth and the benefits gained from tough portfolio adjustment decisions made in the past eighteen months.
“With a streamlined portfolio and good progress in the implementation of key strategic initiatives, we are encouraged by performance trends,” he noted.
Beneke pointed out that another key contributor to the results, was the company’s ability to keep its expenses under control, while investing in the key strategic initiatives the company identified.
One of its key strategic focus areas was the conversion of its regional brands into a national Buco brand. “This has progressed well in the period. We are on plan and on budget, and we have converted five regions, with another to follow in the next few days,” he noted.
To date, the company has also carried out 17 conversions in the consolidation of its information technology platform.
Iliad maintained a good trading momentum amid intensified competition, but expects further growth to be gradual and dependent on economic conditions, as the market remains competitive and challenging.
“Although the passing of residential building plans shows signs of gradual recovery, the lag in the building pipeline continues to impact the industry negatively. Consumer confidence levels are slowly improving owing to the building industry showing signs of recovery, off a low base and financial institutions softening their conservative approach to funding,” the company said in a statement.
The nonresidential market and market for additions and alterations also continued to reflect challenging macroeconomic circumstances, illustrated by ongoing downtrading in the finishing end as consumers search for value against constrained disposable income.
In its specialised building materials division, the company saw improved profitability trends in the retail and wholesale subdivisions, while losses in the ceramics business were reduced. The ironmongery cluster also performed well, ensuring profitability for the retail subdivision.