The small signs of life in the building materials market will gradually develop into a proper recovery.
So says Eugene Beneke, CE of building material supplier Iliad.
Iliad serves the whole spectrum of clients – from big contractors to DIY homeowners – through its 113 stores across SA.
The group has trumped the weak market and shift to less luxurious products in the six months until end-June by way of strict cost control and a focus on working capital.
Thanks to these steps the gross profit margin improved and the drop in pre-taxed profit is limited.
The cash outflow from operations of R1,2m during the corresponding period last year was converted into an inflow of R81m.
Three new stores in Gauteng were not yet profitable.
Beneke says it seems as if the amount of building plans that have been approved in the residential sector has bottomed out, but the recovery is expected to be slow. The non-residential market is suffering, while the market for home improvement is still under pressure, but starting to mend.
This is clear from clients’ search for value for money and the fact that less luxurious products are getting preference.
In agreement with this the division for general building supplies has managed to raise its total income by 3%.
The division for specialised products has suffered due to the woes in the ceramic division and timber wholesale industry.
However, sales in iron products continued to grow.
Beneke says Iliad is well-positioned for when the market recovers, thanks to its strong balance sheet and ability to generate cash. – Elma Kloppers
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