Trellidor earnings take a knock as SA sales slide

Security gates manufacturer Trellidor Group [JSE:TRL] reported a 13.9% decline in headline earnings per share to 25.6 cents in its results for the six months ended 31 December 2019, amid declining consumer spend and house price deflation. 

It opted to declare an interim dividend of 8 cents per share, however, 12.1% down down from 9.1 cents in 2019. It was able to declare a dividend thanks to income reserves from the second half of 2019. 

In a statement on Monday morning, the group said declining consumer spend had hit the middle income market particularly hard - the sector where its business is most focused. 

The group reported a 4% decline in revenue to R275 million, as its gross profit margin dipped 44.6% due to under-recovery of some of its expenses. 

Trellidor Group has two operating segments, namely Trellidor and Taylor. The former recorded a 7.4% decline in revenue. International sales, however, increased by 5.6%, aided by strong performance in other African countries, with African sales growing 21.8%. 

This was offset by weaker performance in the UK, which the group said was coming off a strong 2019 base. In the previous period, the group’s UK business outperformed SA, having seen a 112% increase in income.

Taylor, which produces blinds and shutters, saw its revenue go up 1.3% amid weaker sales in Gauteng.

Last year, Trellidor group announced that it planned to acquire underperforming franchise areas to improve its distribution network. As part of this plan, the group’s Durbanville franchise was purchased, resulting in a sales volume growth of 23.6% in the current period.

"Management is seeking to replicate this success in other areas. Accordingly, three franchise areas have been purchased in the eThekwini Metropolitan area and will be consolidated into single branch during H2 2020," the group said. 

However, it added, the strategy is expected to have a limited impact on earnings in the second half of 2020. The full economic benefit is only expected to be seen in 2021, said Chief Executive Officer Terry Dennison.

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