Based in 1969, Italtile Ltd has all the time had a transparent purpose: to be the very best producer and retailer of tiles, sanitaryware and ancillary merchandise in Africa, coupled with an unrivalled purchasing expertise.

Monetary Highlights. *Adjusted for once-off R39 million IFRS 2 cost associated to the Broad Primarily based Black Financial Empowerment transaction concluded in September 2019.

“We drive our enterprise with our core values,” CEO, Jan Potgieter says. “They inform our insurance policies, practices and choices. It’s subsequently rewarding that throughout all our operational metrics, together with scorecards, KPIs, worker engagement and satisfaction surveys, we achieved, and in some situations, exceeded our targets. That is significantly noteworthy in gentle of our deliberate efforts to streamline the enterprise and extract optimum productiveness and worth from our assets and property.”

Italtile believes that efficient governance is crucial to an moral and profitable organisation. “We’ve enhanced controls in key areas of cybersecurity and well being and security. An impartial security, well being and atmosphere audit carried out famous enchancment throughout the retail manufacturers and provide chain audit outcomes.”

The proudly South African producer, franchisor, and retailer of tiles, bathroom-ware and home-finishing merchandise has 4 retail manufacturers: CTM, Italtile Retail, TopT and U-Mild. These are supported by a community of 206 shops all through South Africa and choose sub-Saharan markets, together with six on-line webstores.

Italtile’s goal market is equally clear: householders throughout the Dwelling Requirements Measure 4 to 10 classes.

The retail operation is strategically supported by a vertically built-in provide chain of key producers and importers, and an intensive property portfolio. Producers are Ceramic Industries (Ceramic) and Ezee Tile Adhesive Producers. The import companies are Cedar Level, Worldwide Faucet Distributors and Durban Distribution Centre.

Folks, Revenue-share and the Pandemic

Throughout the Group’s operations the main target throughout the previous 12 months remained steadfastly on buyer satisfaction and delivering an unrivalled purchasing expertise. “In gentle of the challenges posed by the pandemic, this proved very troublesome at instances, requiring private sacrifices by a lot of our folks,” says CEO, Jan Potgieter. It’s the extraordinary people who work for Italile and decide to its high-performance tradition that set the enterprise other than others, he says.

In line with the Group’s ethos of reward and partnership, each particular person within the enterprise is entitled to a proportion of the income made of their respective enterprise items. “This scheme incentivises our folks to take part within the success of the enterprise, and sometimes has life-changing advantages for recipients,” says Potgieter. He provides that this can be very satisfying that the Group was capable of reward its staff for his or her distinctive contribution to the outcomes, by way of R290 ($18.1m) million paid out in revenue share. This revenue share scheme is extra to the share incentive scheme which workers are eligible for after three consecutive years of employment.

A house-improvement growth was fuelled by enforced distant working throughout the pandemic. With folks spending extra time within the house, and with extra time on their arms, beforehand uncared for DIY initiatives had been addressed, whereas others tailored their properties to create multifunctional areas.

Italtile ten-year share price growth (%).

Italtile ten-year share worth progress (%).

Though discretionary earnings remained constrained within the low-wage inflation atmosphere, a number of conducive components inspired householders to put money into their main property. There have been favourably low rates of interest, out there funds beforehand earmarked for transport, journey and different leisure pursuits, debt-payment “holidays”, and short-term pandemic assist funding.

Customers have additionally develop into extra risk-averse, and extra decisive of their spending behaviour. In-store searching and analysis of comparable choices has given strategy to on-line searches. When clients do determine to transact in-store, they gravitate to trusted manufacturers with one-stop-solutions.

“Our enterprise mannequin is well-suited to this new pattern,” says Potgieter.

“Our providing is supported by multi-channel buying and selling platforms. Our manufacturers are trusted family names, and our provide chain meets the one-stop criterion.”

Italtile Group Efficiency

Regardless of the difficult buying and selling circumstances, the enterprise delivered double-digit gross sales and revenue progress throughout all its enterprise items, merchandise classes and all buying and selling geographies in comparison with the prior 12 months. Considerably, the outcomes achieved additionally outperformed these reported in pre-pandemic 2019.

Potgieter says whereas the enterprise benefited from the house enchancment growth, different key contributors to the sturdy outcomes are the agile response of the resilient staff members; the strong enterprise mannequin and built-in provide chain; the concentrate on steady enhancement of the client purchasing expertise and funding in innovation; and the ethos of profit-sharing and partnership with the Group’s folks.

On the finish of 2020, Italtile decided a spotlight for the 12 months forward, and the strategic imperatives that might enable achievement of the Group’s targets.

New shops had been opened, and the revamp programme superior. “Through the evaluation interval, we opened 13 new shops and closed 4 non-performing shops, bringing the whole retail community to 206 shops,” says Potgieter. A complete of 11 new TopT shops and two franchised U-Mild shops had been opened. “In July and August 2021, we opened an extra 5 shops which had been delayed by the influence of the pandemic.”

Inventory Administration

Sturdy demand and considered administration have served to enhance inventory flip throughout the assorted enterprise items, most notably within the first 9 months of the evaluation interval. The Group benefitted from its built-in provide chain, with 76 p.c of complete procurement sourced from native producers and suppliers. “That allowed us to mitigate erratic world provide and transport constraints,” notes the chief government.

Optimum product combine and vary was supported by the enterprise optimisation programme, and the improved use of analytics was a spotlight space.

Advertising Campaigns

Notable spikes in gross sales over promotions and paydays affirm that the overwhelming majority of Italtile’s clients are price-sensitive. “Our manufacturers are tailor-made to bespoke advertising and marketing initiatives throughout the promoting platform spectrum to convey our worth, worth and repair choices. Disruptive campaigns differentiated us from our opponents and drove beneficial properties in market share and share of pockets.”

This was bolstered by means of expertise throughout buying and selling platforms.

The Group’s IT unit makes a key strategic contribution, by way of growing market main technological improvements throughout the Group’s multi-channel providing and operations.

ESG Credentials

“Our purpose for the 12 months was to cut back the Group’s carbon footprint and the consumption of non-renewable assets,” Potgieter says. This was achieved by rising use of photo voltaic vitality, harvesting rainwater, and recycling water within the factories. Photo voltaic vitality installations have been fitted at 36 shops, two of Ceramic’s factories, and the Group’s assist centre and coaching academy. Properties are constructed and renovated with vitality environment friendly and environmentally delicate practices and supplies.

Expertise has helped operations to satisfy targets, slicing the consumption of non-renewable assets and “recovering, recycling and reusing” the place doable. Ceramic’s factories rank among the many most vitality environment friendly on the earth, and rehabilitation of its uncooked materials quarries is carried out concurrently throughout use and end-of-productive-life levels.

Eco-friendly tiles, faucets, bathe heads and bogs are all designed to minimise the usage of pure assets, contributing to a big carbon footprint discount for the Group and its clients. The Group’s not too long ago launched low-carbon footprint Eco-Tec tile vary is recognised as a frontrunner within the manufacture of eco-sensitive merchandise.

Social influence is one other important issue within the enterprise. “Our ‘proudly South African’ ethic is a key theme in our shops and communications campaigns,” says Potgieter, “and we additional our assist for the economic system by promoting top quality merchandise manufactured by native folks, creating employment, coaching, and expertise improvement. About three quarters of all merchandise bought by our retail manufacturers is regionally produced.”

With the Group’s Italtile and Ceramic Basis, R121m ($7.5m) was invested in expertise improvement, schooling, sporting infrastructure, bursaries, conservation and outreach programmes for deprived and disabled folks. “A key element of those programmes is that they’re consequential, sustainable and measurable,” Potgieter says.

The Group’s dedication to reworking the enterprise from inside relies on administration’s steady concentrate on a spread of significant interventions. Exceeding its targets, the Group achieved a Broad Primarily based Black Financial Empowerment ranking of degree 2, equating to 96.84 factors out of a possible most 100 factors – a creditable achievement.

Italtile Future Outlook

Investing sooner or later is a serious strategic thrust. Present capital expenditure initiatives embody the continued roll-out of latest shops, improve and development of latest services, and enlargement of the Group’s sustainability and vitality programme.

Potgieter says, “We’re assured that if we execute retail excellence disciplines higher at each buyer touchpoint and cut back current inefficiencies in our enterprise, we are going to construct additional momentum to ship gross sales, revenue progress and a acquire in market share.”

Whereas the pandemic is more likely to proceed to influence the South African economic system, “We’re happy that our methods, responsive techniques, hands-on administration staff and resilient enterprise mannequin will enable us to reply nimbly to future challenges.”