Iliad Africa conducts feasibility studies for growth opportunities

ILIAD Africa will be conducting extensive feasibility studies into new geographic locations as it continues to search for growth opportunities.

The building materials distributor said yesterday that it expected a gradual improvement in the building and construction sectors this year. This comes after the industry has faced a challenging trading environment over the past two years.

“Expanding our footprint and enhancing customer satisfaction remains a priority in the year ahead,” Iliad’s chief executive Eugene Beneke said.

He added that market indicators were reflecting opportunities for real growth going forward.

Through its retail brand, Buco stores, Iliad Africa managed to open two new stores, one in Mpumalanga and one in the Western Cape in the last quarter of 2014.

Beneke said the group was confident that its initiative to implement various portfolio adjustments in 2013 was paying off and had laid a solid foundation for the group to move forward.

Iliad fell by 2.2 percent to R4.4 billion for the year to December.

Earnings a share came in 73.3 cents higher compared with a loss of 4.8c a share in 2013, while headline earnings a share grew to 72.3c from 40c in the previous corresponding period.

The group declared a dividend of 22c per share for the period up from 20c in the previous comparative period.

Iliad ended the year with net cash and cash equivalents of R97.1 million, compared with R38.8m at the end of 2013.

“What was encouraging for us was that we have a strong balance sheet; we are not geared and can, therefore, facilitate some needed growth in the business,” Beneke said.

He said Iliad’s results were achieved under difficult trading conditions in a sector influenced by a lack of spend in infrastructure projects, as well as poor performance by the construction industry.

“Despite these conditions, we were able to achieve a 1.2 percent improvement in gross margins, mainly due to internal efficiencies,” he added.

He said year-on-year expenses increased by only 0.8 percent, reflecting the impact of the 2013 portfolio adjustments and the focus on expense management.

Beneke said the group had made significant improvements and was in a better position than it was five years ago.

“We have made significant changes and part of that was consolidation of the Buco brand and major initiative to integrate all the information technology systems in the group on to the enterprise resource planning platform,” Beneke said.

In 2013, the group also made major adjustments to its portfolio, including the sale of a few businesses and the closing of some branches.

Growth in the group would be approached from three angles, including organic growth, the opening of stores and acquisition opportunities, Beneke said.

The group’s specialised building materials division grew revenue 8.6 percent, while revenue in the general building materials division achieved mixed results with the inland unit increasing revenue by 3 percent and the coastal unit decreasing revenue by 2.9 percent.

Share closed 0.68 percent down at R8.80 yesterday.

We have a strong balance sheet; we are not geared and can, therefore, facilitate some needed growth.