Trellidor on Wednesday reported solid revenue growth and a significant improvement in earnings for the six months to end-December, amid mixed economic conditions.
Revenue increased 4.1% to R304.3m from the previous interim period. Headline earnings per share rose 38.3% to 29.6c.
The company said the domestic market remained constrained by high interest rates and low disposable income levels, while its international divisions continued to deliver encouraging results.
The Durban-based manufacturer of security barriers and related products said it had also benefited from stabilising supply chain conditions and declining metal prices.
In terms of cash flow and debt management, Trellidor generated R38.6m in cash from operations, slightly down from R39.5m in the previous period.
The company said it made progress in reducing its net debt, which decreased by R31.5m to R85.3m. This resulted in lower net interest payments, dropping from R8.5m to R5.7m. “Our focus on debt reduction is part of a broader strategy to enhance financial stability and reduce associated risks.”
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 most recent time Trellidor paid dividends was in the 2021 financial year.
Despite the improved results, the company’s board again opted not to declare an interim dividend.
“The decision aligns with the company’s strategy of normalising borrowing levels and free cash flow generation before resuming dividend payouts,” the company said in a statement. “The objective is to ensure that the company’s financial foundation is robust enough to support sustainable dividend payments in the future.”
As part of its strategy, Trellidor said it aimed to recapture market share in SA while driving revenue growth in the UK and other African markets.
“We are confident in our ability to generate strong cash flows, which will be used to further reduce debt levels and lower associated finance costs.”
Trellidor’s share price rose 4.48% to R2.10.
The company’s custom-made security barrier products include security gates, burglar guards, shutters and security screens for residential, office and retail premises.
It operates through a network of about 70 franchises in SA and an additional 17 internationally, spanning Africa, UK, Israel, Europe and Australia.
In Ghana, the company operates through Trellidor Ghana, which includes a trim shop for production of custom-made products.
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