Verimark to go after exports

Verimark CEO Michael van Straaten is on the prowl for new export opportunities.

Ten years ago, Verimark was supplying its products to 50 countries, including Australia, Brazil, Canada and Singapore. As demand for products and profitability sank, it pulled out of these markets.

Now Van Straaten says Verimark has received renewed interest from international markets for its products, reviving its appetite to give exports a second shot. The CEO has recently visited trade fairs in France, Germany, Spain, Las Vegas, China and Hong Kong.

Verimark is increasingly under pressure to diversify from SA, which would act as a hedge against the risk of rand volatility. The retailer is vulnerable to rand exchange movements as it imports merchandise.

Verimark’s profit before tax dropped by 22.7% to R13.1 million for the year to February 2015, when the rand weakened by 35%, versus profit increases of 184.7% to R37.3 million for the year to February 2016, on a rand that improved by 25%.

Despite the rand being remarkably resistant through downgrades, political uncertainty and an economy entering a recession, Verimark’s revenue rose by 13.7% to R209.7 million for the six months to August 2017. However, its profit before tax decreased to R2.2 million, compared to R3.9 million in 2016.

Cash generated from operations was a negative R30.3 million, compared with a gain of R8.1 million. The introduction of new products by almost 86% meant it increased its advertising spend and took a profitability knock.