Amap has its eye on local rights of brands
March 16, 2009
By Tom Robbins
Amalgamated Appliance Holdings (Amap) would seek to buy the exclusive local rights of imported brands at discounted prices if its agreement to sell a factory property for R35 million was concluded, Alan Coward, the chief executive, said on Friday.
"We selected the purchaser after receiving a number of offers," Coward said after the company reported a first-half cash surplus, despite an accounting loss.
The agreement to sell the Atlantis property to Altius Trading depends on Altius getting a mortgage for 65 percent of the purchase price.
"We'll look at opportunities to buy a couple of brands and retain some cash in the bank; we don’t want an overdraft," said Coward.
The brands in which the group currently deals include Russell Hobbs and Pineware.
The group is continuing discussions to sell to black empowerment buyers a controlling stake in the small, underperforming manufacturing business located in the same factory property.
The company was one of the earliest consumer goods groups to suffer in the down cycle, and consequently it was among the first to start stripping costs.
The Amap share price has been falling since 2007, when it spiked at more than R6. It gained 4.17 percent on Friday to close at R1.25, while the sector added 1.96 percent.
Amap last week reported a loss of R49 million on its income statement in the first half to December, but it turned a cash deficit into a surplus. Excluding a non-cash writedown of R75 million for unsold power inverter stock, the group would have reported net profit.
The importer of electrical appliances and electronic goods turned a cash deficit of R17 million at the end of June to a surplus of R43 million at the end of December.
Over the same period in 2007, the cash surplus declined by R145 million to R15 million.
When Coward was appointed chief executive in February last year, the firm had a "significant" bank overdraft. And lower consumer demand resulted in the company carrying stock it could not sell.
Cost cutting included reducing staff by 630 to 570 and outsourcing warehousing in electronics.
Low-margin TV and audio products were discontinued, as it sacrificed revenue.
Coward said that while "the low-hanging fruit has been picked", more rationalisation was "to come".
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