Commercial Products

Divisional overviews
Commercial Products

Howard Greenstein

Howard Greenstein
Chief executive

Trading profit
grew by 3.2%
Revenue growth
of 11.2%
Excellent results by Berzacks, Plumblink,
Bidvest Materials Handling, Academy
Brushware and Vulcan
Trading margin
was steady
Salient features

Salient features

  • The division produced a satisfactory result which demonstrates tremendous resilience in this market.
  • The results include 12 months' trading from Brandcorp compared to nine months in the prior year. Excluding Brandcorp, revenue increased by 5.9% and trading profit by a commendable 7.8%, which was delivered in a tough trading environment. Market share was gained in certain instances.
  • Industrial activities represent approximately two-thirds of the trading profit. Despite numerous delayed industrial projects and depressed manufacturing and construction sectors, industrial businesses grew, which is largely due to the strategic positioning introduced over the years to deliver wider product ranges, improved margin management and ensuring that it remains relevant to customers. Many businesses delivered double-digit growth.
  • Yamaha operated in a constrained consumer environment and Renttech's trading profit was significantly down due to reduced project work. There were disappointing results from Afcom and Buffalo Tapes.
  • Pricing pressure within the consumer division was relentless, but a significant amount of work was done on sourcing and price relevance in the market, which ensured the trading margin within the consumer business was steady. Home of Living Brands had a much improved second half, compared to the first.

Strategic focus

Further investments are being made into facilities, product ranges and sales teams to drive business. Various consolidation opportunities are being assessed, while an enhanced capital expenditure programme is under way within some of the industrial businesses to ensure future growth prospects, which will also result in efficiencies going forward. Margin management will remain an important aspect of the division.

Transformation

The division has made tremendous strides over the past 18 months toward improving its B-BBEE rating. This resulted in a positive improvement in management control underpinned by 50% of the total appointments at top, senior and middle management being black. The total skills spend for the year amounted to R24 million which is an increase over the previous year. Procurement is a challenge bearing in mind the impact of the 51% black ownership requirement, and the effect of poorly rated suppliers and imports. The division has scored very well in relation to Enterprise and Supplier Development and SED.

Outlook

There are various plans under way to ensure growth and improved profitability. These include: Plumblink's expanded footprint of 95 stores together with an enhanced distribution capability; strategic, product and system changes made at Berzacks, Brandcorp, Afcom, Buffalo Tapes and Renttech; restructuring programme at Matus; investment in garment manufacturing capacity at G Fox; the consolidation of premises and systems at Academy Brushware and the refocusing of efforts on new tenders, projects and partners at Interbrand, MIC and Motoquip.

The overriding imperative for sustained growth, however, is the urgent need for infrastructural development and upgrades.

Our story

Proudly Academy Brushware

Academy Brushware was founded in 1953 by an industrious Italian national, Vittorino Meneghelli who was seeking new challenges in South Africa to invest his personal knowledge in the brush trade, which was gained from a family business spanning several decades. Although he was a qualified accountant, being exposed to the family business probably influenced his decision to attempt the same thing in his new surroundings and country.

Publishing and Events recognised Academy Brushware as one of the Top 300 Performers of the year in business and industry for 2004/2005

Between 2002 and 2013, the revenue grew by a staggering 1400%

Academy Brushware manufactures 15 832 brooms per day

Revenue grew as did the innovative product offering

From humble beginnings and with limited staff the business started growing and more people were employed in handling the administrative, production and dispatching responsibilities. Paint brush production became the main force of the business and an expansion programme entailed the acquisition of brush-filling machines to satisfy the needs of the domestic broom and affiliated brush market. The challenges were ongoing and dictated that paint rollers be added to the existing range, putting the company in a position to offer the complete range of brushware and allied products to the domestic market.

In the mid-1960s, a mere 10 years after starting up the business, it had developed into a bustling organisation and dominated a large share of the domestic market. It was also a founding member of the local Brushmakers Association. A substantial range of its products were manufactured under SABS specifications. Newly designed products were continuously expanded. During the mid-1970s, the company ranked amongst the top two brushmaking companies in the country.

Always looking for new challenges, the company became an accredited user of the SABS - ISO 9001 Quality Standards business concept but after a few years eventually realised that the international AJA-ULAS ISO Standards held more promise for exposure to the global markets. It applied and won accreditation as a user of this quality system in February 2003.

Publishing and Events recognised Academy Brushware as one of the Top 300 Performers of the year in business and industry for 2004/2005.

In 2002, the management team at Academy Brushware successfully concluded a management buyout of 80% of the share capital of the company, and in a short time, turned the company around, making it a leading manufacturer in the painting and cleaning application field. The company had five directors on its board, a well-trained management structure, administrative personnel and technical personnel. Between 2002 and 2013, the revenue grew by a staggering 1400%, agents were appointed in various regions and the factory, which had been opened during the 1960s in Babelegi, was expanded.

Academy Brushware was acquired by Bidvest in November 2013. The timing of the acquisition was perfect with two of the five Academy partners looking for a quick exit strategy and retirement opportunity. Dave Jacobs (Production Director) and Andrea Meneghelli (Director) both retired, and the remaining three directors have continued with the company. Craig Smith was appointed Managing Director, whilst also continuing with his marketing and sales portfolio, Dawie Barnard, now retired, became Operations Director, who has also retired, and Anton Van Der Merwe became Financial Director – he is now Chief Financial Officer.

At the time of the management buyout, Academy was producing 9 300 brooms per day on old machinery. With capital allocation from Bidvest, a plan was put in place to modernise the factory into a global best practice facility. Productivity and service levels soon improved. The company now manufactures 15 832 brooms per day. Revenue grew as did the innovative product offering. Over the past five years, due to productivity initiatives, innovation in selling, proper systems and an expanded factory, the profitability of Academy Brushware has grown fourfold.

During the current year, Academy Brushware's legacy premises were replaced with new, modern facilities, which will ensure that the growth expected from the company over the next few years is achieved and that it can adequately cater for the growing export market.