Trading conditions are still tough, says consumer electronics company Amalgamated Appliance Holdings (Amap), as it reports earnings per share 50% down in the year to June.
Amap has an appliance and electronics division and houses brands such as Tedelex, Russell Hobbs and Polaroid.
In a Stock Exchange News Service announcement, the JSE-listed company says the recession has had an impact on the consumer segment as shoppers bought less expensive products.
Revenue declined 35%, from R1.6 billion to R1 billion, while the loss for the year increased 286%, to R69 million. Earnings per share were down 50%, to a loss of 2.7c, from last year's per share loss of 1.7c.
Amap says its gross margin declined from 18.3% to 14.7% for the year and the company spent R7.8 million on restructuring, which it expects to pay off through lower running costs in the future.
The consumer goods company has been struggling for some time and in March said revenue was 33% lower, at R612 million, in the six months to December. The loss per share was 23.6c, or 250% worse than the first half of last year. It was hard hit by its strategy to stock up on power inverters, which backfired after load-shedding came to an end.
Despite continuing difficult trading conditions, the company is “positive about the future” as the restructuring has led to lower overheads and it has a new product range. Lower interest rates and the 2010 World Cup are expected to bolster sales.
Taking pain
The company says it had to discount the Intellipower power inverter range of products, which had the most significant impact on the business. “The downturn resulted in reduced demand on the national electricity grid and power outages ceased,” it says.
In addition, world battery prices dropped due to reduced copper and lead costs. The group also received a shipment that was not up to scratch and has put in a claim for a refund. However, it had discounted the product, which resulted in a loss for the product line of R67.5 million before tax, compared with a gain of R14.4 million last year.
Amap has changed its selling model because of fierce competition in the consumer segment. As a result, it has had to retrench 262 staff, clear stock and made foreign exchange losses.
The impact of the downturn also resulted in short time, layoffs and retrenchments at its appliance factory in Pinetown and electronics factory in Atlantis.
Amap says it is in negotiations with unnamed parties to sell Tedelex Manufacturing, Tedelex Properties and the Atlantis TV factory operation, which is a division of Tedelex Trading. It also embarked on a programme to outsource the electronics service operation, which was finished in the first quarter of the new financial year.
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