Flooring, water and chemicals specialist Accéntuate experienced a tough six months to December 31, 2017, with the company moving from a R3.5-million profit in the same period in 2016, to a loss of R1.78-million.
Accéntuate said on Friday that its business had suffered on the back of depressed macroeconomic conditions, political uncertainty and a lack of confidence in the country.
Speaking in Johannesburg, CEO Fred Platt noted, however, that the past week “hopefully signalled the end of ten years of decline” in government infrastructure spend.
“At the end of last year we were forced to ask ourselves if we should continue to manufacture in South Africa.”
Platt said he was positive that new president Cyril Ramaphosa, elected last week, would bring about a change in government expenditure.
“We believe him when he talks about localisation, manufacturing and infrastructure spend.
“It is like the Reserve Bank said at Davos – the biggest stimulus package in the economy is confidence, and we can see that confidence is returning to South Africa.”
Platt warned, however, that this confidence would not have an “enormous impact on Accéntuate over the next six months. We will remain under pressure for the next year.”
Accéntuate revenue for the six months under review decreased by 1.3% to R157.3-million, owing mainly to lower sales volumes in the FloorworX business.
The flooring business operations contributed 78% of group sales.
Production volumes at the East London flooring manufacturing facility were purposefully managed down as a result of low government demand for classrooms, clinics and hospitals.
Margins were impacted by this lower level of production, as well as currency volatility, as a significant proportion of FloorworX product is imported from abroad.
The Pentafloor acquisition was concluded by the end of September last year.
Pentafloor is a supplier in the access (raised) flooring market in South Africa.
The acquisition provides Accéntuate with a product category that is currently not in its repertoire, allowing it to diversify further from government infrastructure, to commercial flooring.
Platt said the company was looking at adding more products to its portfolio in a continued attempt to diversify.
Accéntuate’s Environmental Solutions Business, which comprises the chemical blending Safic business operations, contributed 22% of group sales.
Revenue was flat at R34.9-million. Increasing costs resulted in an operating loss of R2.1-million.
Sales volumes were affected by lulls in the manufacturing and mining sectors, said Accéntuate.
A new sales director is to focus on gaining market share in specialist chemical sectors.
A three-year plan for organic growth was also put in motion.
Accéntuate’s water treatment business, in which it owns a 40% share, is still to contribute significantly to the group. However, Platt aimed for this change in the next 12 months, as South Africa appeared to have woken up to the crisis it faced in terms of water supply.