Western Cape Business News

Send  Share  RSS  Twitter  02 Feb 2010

MANUFACTURING: Hardly Child's Play


Recent Western Cape Business News

WHILE Seardel Investment Corporations’s main textile and clothing manufacturing businesses have seen their trading margins ripped to shreds, at least the company could take some comfort that its toy and electronics businesses would donate a dollop of profits to proceedings.

Well, that was true until very recently…

Prima described the six months between March and September last year as “one of the most difficult periods” in the history of the Epping-based toy manufacturer.

With retail confidence at an all time low Prima’s main effort was spent trying to control stock levels, which naturally impacted turnover levels.

While turnovers slipped, Prima management – led by Ian Morrison – did well to deliver R12 million in operating profit. Perhaps more important was that Prima maintained its market share by continued focus on the appropriate mix of product and attention to detail on the shop floor.

While Seardel CEO Stuart Queen said that Prima had secured new character license agreements, there seems to be a new plan to broaden the company’s reach beyond toys.

Queen spoke of supplementing the existing business by exploring opportunities that fit into Prima’s profile and expertise of distribution of branded FMCG (fast moving consumer goods).

He indicated this ‘supplementing’ would be in the area of new business opportunities outside of toys and games or for new licenses and distributorships.

Prima has already created a new trading division called Prima Interactive.

According to Queen, Prima Interactive specialises in the distribution of electronic games for the major console offerings and personal computers.

One presumes Prima Interactive is just the first step in what could be a long-term shift in broadening Prima’s offerings.

Perhaps the move into electronic games and beyond will even bring Prima closer to its stablemate, Sharp Electronics, which has seen profits fizzle out in the tough trading environment.

Copier and calculator sales fell below last year’s levels, and the division recorded a R1.3 million interim loss.

Hopefully Seardel’s predictions that the copier and calculator markets will show some improvement from the second quarter this year will prove correct.

In this regard one has to remember that since empowerment group HCI took charge of Seardel there have been some tough decisions made – most notably the closure of parts of Frame textiles and the Scripto division (which formed part of the electronics cluster).

Management notes, though, that the big challenge is trying to balance the weaker sales and margins with the reduction of fixed expenses while maintaining sales and marketing efforts.

That won’t be easy in the prevailing trading conditions, but Queen is still confident the electronics division can return to profits in the second half of this financial year.

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