Security barrier manufacturer Trellidor says a strong performance by its UK division underpinned its profit in the year to end-June, offsetting weak demand in SA.
Group revenue for the year rose 12.6% to R565.8m, the group said on Friday, while after-tax profit increased nearly 10-fold to R34.7m, translating into headline earnings per share of 36.1c, from the 4.2c reported a year ago, it said.
Durban-based Trellidor manufactures custom-made barrier security products that are distributed via a franchise and branch network operating throughout SA, Africa and the UK. Custom blinds and security and decorative shutters are produced and distributed at the company’s Taylor business while products for skirting and cornicing are imported and distributed by NMC.
The JSE-listed group reported profit drops in both NMC and Taylor, saying demand in the market for Taylor’s decorative products was muted.
Conversely, in Trellidor, revenue for the year jumped 22.6% to R404.2m, resulting in an operating profit of R57.8m from R15.9m last year.
CEO Terry Dennison said a decline in domestic market income and elevated opening debt levels at higher interest rates, constituted two significant problems for the group.
This is as high interest rates and constrained disposable income, coupled with supply chain disruptions and high metal prices have created a tough trading environment.
Historical decisions made over the past decade regarding the deployment of capital have resulted in the company carrying an excessive level of debt, the effect of which has been disappointing returns for shareholders. The last time Trellidor paid dividends was in the 2021 financial year.
Though Trellidor managed to reduce net debt from R146.7m to R115.7m in the year, the board, led by Kevin Hodgson, decided not to declare a final dividend citing the high debt levels. However, it said it would look to revert to paying dividends, once borrowings had normalised.
In November, the group was granted reprieve from its primary lender, FNB, which condoned covenant breaches for the 2023 financial year and did not change the current financial covenants or impose any new covenants or conditions.
On Friday, Trellidor said as of June 30, the financial covenants were well within the required levels due to the better financial performance and decreased net debt levels.
The company, with a market cap of R200m, said it would focus on shaving down debt and regaining market share.
“Restoration of shareholder value is the foremost strategic focus of the group,” the company said.
“Our share in the domestic market needs to be recouped and expanded, supported by revenue-generating initiatives in the rest of Africa and abroad,” the company said. “In addition, efforts to optimally manage costs, working capital, and net debt will continue.”
At 1.10pm on Friday Trellidor’s share price had fallen 2.33% to R2.10. It has, however, gained 28% in the past month.
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