JSE-listed industrial products provider Hudaco posted an increase in earnings for the year ended November 30, 2016, overcoming the “exceedingly difficult” trading environment in the prior financial year.
Speaking at a presentation of the group’s results, CEO Graham Dunford said Hudaco was “pleased to have been able to catch up the deficit and match [the prior year’s] results.”
“The final dividend has been increased by 10c a share to 355c, to bring the total dividend for the year to 525c, the same as in 2015,” he said.
Headline earnings a share rose 5% to 1 222c, with comparable earnings a share marginally up to 1 171c.
“The return on equity was a very respectable 20.5%,” Dunford said.
The group had R905-million in net borrowings as at year-end, down from R1.02-billion the year before, notwithstanding R168-million spent on acquisitions, representing gearing of 42%.
The consumer-related products segment, which comprises ten businesses, contributed 51% of Hudaco’s sales and 61% of operating profit in 2016.
“The automotive businesses of Partquip and Abes had a very good year and there was good growth from our security businesses.”
Elvey Security Technologies had a significantly better year; however, the main increase was in the project business through Pentagon.
“Wireless connectivity distributor MiRO had a good first seven months in the group and we look forward to its contribution in the years ahead as it has significant potential for growth.”
Rutherford, the second-largest business in this segment, which distributes Makita power tools and garden equipment, had a difficult year, partly attributable to delays at the National Regulator for Compulsory Specifications in issuing authority letters to launch new products.
The segment increased sales by 7.6% to R2.8-billion and operating profit by 6.6% to R405-million.
The 20 businesses that constitute the engineering consumables division contributed the remaining 49% of sales and 39% of operating profit during the period.
Dunford stipulated that this was another difficult year for the businesses in this segment serving the depressed mining and manufacturing industries, adding that the severe drought that gripped the Southern African region also had a negative effect on sales.
“Nevertheless, most of the businesses in this segment performed satisfactorily considering the economic conditions,” he noted.
There was a 12% increase in operating profit for the financial year under review, compared with the second half of 2015.
Dunford noted that the company had a more positive outlook for the year ahead, pointing out that the uptick in mining and manufacturing activity would have a positive impact on the company.
He noted that Hudaco has also seen an increase in its order book.
“Notwithstanding the challenges that are bound to arise from the economic and political environment both nationally and internationally, we are optimistic that earnings in 2017 will be impacted positively by a combination of factors,” Dunford said.