Johannesburg - Industrial conglomerate Stenhoff International Holdings [JSE:SHF] plans to up its investments in mainland Europe, as it has identified the region as the fastest growing among its four regions of operation.
Reporting results for the year to end-June 2010 on Tuesday, Steinhoff - a diversified portfolio of furniture manufacturing, specialist retail, logistics and automotive operations - said its European operations continued to impress, with more opportunities unfolding.
The group on posted a 6% fall in revenue due to the strong rand. At 244.2 cents, diluted headline earnings per share were 1% down from last year.
During the year, Steinhoff generated 52% in revenue from its offshore European operations, with the UK accounting for 17%.
Group CEO Markus Jooste was, however, pleased with the R5.7bn or 45% increase in the group's net cash flow generated from operations. This was a result of the company's strategic cost efficiency programme and focus on cash generation.
"This positions Steinhoff well for ongoing strategic expansion," said Jooste.
"Our mainland European businesses reported strong sales performances supported by a resilient economy and strong consumer behaviour in countries such as Switzerland, Austria and Germany," Jooste said.
"Germany was a strong performer for the group. The country's low debt levels, coupled with a very value-orientated population, was good for our business."
Steinhoff said the roll-out of additional stores throughout mainland Europe (which excludes the UK) will continue in the new financial year, with at least six stores being added every three months.
Pacific region disappoints"Our various retail participation joint ventures continue to grow. The focus remains on securing top class retail sites throughout Europe, particularly in Eastern Europe. These investments continue to facilitate the growth and distribution of products throughout the European Union, and will form the foundation of the organic growth targets," said Jooste.
Southern African operations showed encouraging growth, and revenue across the region increased by 6.8%. Southern Africa accounted for 43% of Steinhoff's revenues during 2010, and it was the diverse nature of the African industrial businesses which resulted in good revenue growth.
However, the decline in the SA construction and furniture markets continued to have an adverse effect on Steinhoff's timber operations. The company had to restructure the division, including the closing of a plant in Stellenbosch.
Performance in the Pacific region continued to disappoint, with retail sales weaker than that of the previous year.
Looking ahead, the group said rand strength will continue to impact its reported earnings if euro profit growth does not outperform rand fluctuations.
The group said its integrated business model remains a key competitive advantage and - together with the flexibility of supplementing its own produced goods with third-party sourced products - continues to achieve market share gains.
- Fin24.com