Divisional overviews – Commercial Products

Howard Greenstein     Commercial Products

Howard Greenstein
Chief executive

Bidvest Commercial Products produced a good set of results in a tough market, and did well to expand capacity in most businesses based on customers’ needs and wants. Trading profits increased 48,5%, after taking the Brandcorp acquisition into account, and this was achieved despite price pressure from customers and price deflation.

 

Contribution to
trading profit

12%

Successful Brandcorp acquisition
Exceptional Plumblink, Academy Brushware performances
Home of Living Brands defied tough consumer environment

Salient features

  • The completion of the acquisition of Brandcorp enabled the planned shift in mix towards higher yielding products, and assisted in increasing overall margins.
  • Brandcorp performed in line with expectations. A refocused sales and product structure at Matus is being rolled out and Renttech is being rejuvenated and modernised.
  • Plumblink and Academy Brushware both delivered double-digit growth.
  • Sanlic House of Locks returned to profitability after certain change initiatives were implemented.
  • After five consecutive years of growth, Yamaha succumbed to the tough operating environment, and a different business model is being envisaged.
Driving innovation

At Bidvest Commercial Products our view of innovation extends beyond the use of technology. It is about changing one’s thinking to drive customer centricity. We have a tremendous track record of success, but we live in an age of market disruption, which does not allow any respite for market arrogance or dominance. We question ourselves regularly about how to operate more effectively, whether from a product, mechanisation, customer relationship, systems or management point of view. We all agree that the needle of the new normal needs to move.

As such, we are constantly reviewing our operations and, where possible, disrupting the full value chain by sourcing, automating, warehousing and distributing directly. How we present product bundles from our internal portfolio to our customer base is receiving attention, and our service levels are being benchmarked to international standards. This is to ensure we can exceed customers’ needs and expectations. We are bringing technological solutions to an old and established industry, which is resulting in savings and efficiencies for the benefit of our customers.

Afcom, the leading manufacturer and distributor of packaging and fastening products has moved to new premises which has state-of-the-art machinery and automated functionality. This has resulted in the operation being better positioned to bring product to the market more efficiently and deliver savings for our clients. Innovative thinking has also changed the marketing mix at tool wholesaler, Matus, where a significantly more focused approach to product distribution is being implemented.

Sustainable growth

Training, succession planning and a diverse team made up of experienced and young staff, is the key to enhancing the depth of management and we are ensuring this mix of talent remains available to the division. Growth, in our view, will be driven by industry expertise and a deep knowledge and understanding of industry dynamics and customer needs. Employees gaining offshore exposure is also being encouraged.

Training and learnerships are game changers that result in a better level of employee and more robust businesses. These interventions have become an imperative throughout the division and some early signs of success are being achieved, specifically at Plumblink and Vulcan. At G. Fox and Buffalo Tapes, realigned management teams have started implementing revised growth plans.

This year we spent R23 million on training. We are increasingly finding ways to use preferential procurement to our advantage and continually evaluate opportunities to work with black-owned SMMEs. Our efforts to procure locally are continuing, and we have had some success in certain areas.

Going beyond

Trading within the Industrial sub-division will remain tough with the manufacturing, construction and mining sectors under pressure. The Consumer sub-division is expected to continue to feel the immediate effects of depressed consumer activity until confidence returns. Political risk, and the management of foreign exchange risk are key for a large importer of product. Regulatory red tape, and giving credit in a recessionary environment remain the most significant immediate challenges.

Innovation is at the forefront of change. The opportunity inherent in this way of thinking is being introduced throughout the division. We have a vast universe of products and the potential for cross-selling exists. We are bringing more awareness to specific products through a successful advertising campaign. Our expanded capacity in all business is being leveraged and we plan to continue growing, both organically and acquisitively, in a responsible way. This will enable enhanced future profitability and position us better for the future.

Ultimately, we aim to exceed the expectations of our customers. We will continue to drive change and innovation and adapt to the new normal market environment. This will drive internal growth and enable an ability to consider niche acquisitions in various industries, locally and in selected areas internationally.

Commercial Products
Commercial Products