Western Cape Business News

Send  Share  RSS  Twitter  24 May 2011

MANUFACTURING: Macadams Produces More Dough


Recent Western Cape Business News

IT would seem a move into new manufacturing premises allowed Blackheath-based baking systems and bakery equipment manufacturer Macadams to produce a lot more dough in 2010.

Macadams, which has been around for over 100 years, relocated its manufacturing capacity to a new purpose built facility in May last year. The new facility accommodates Marsden, the company’s bakeware division which had somewhat inconveniently operated from a separate facility in the past.

Daryl Paynter, the CEO of Universal Industries (the holding company for Macadams) says the integration of Marsden offers many operational synergies and savings.

While the new facility was only utilised for just over half the financial year, Macadams appears to have already shown the benefits of the new arrangement in its profit figures for the year to end December 2010.

Macadams managed a solid performance with revenue lifting 4% to R308 million. But the benefits of working smarter shone through at bottom line with Macadams’ operating profits shifting up 17% to R48 million in what Paynter describes as a tough trading environment.

The effect of the new facilities can arguably be seen in the second half performance, which added a hefty R33 million to the interim profits (which were reported as around R15 million at the end of June 2010).

Paynter says Macadams’ operating profit margin improved as the business benefited from the relative strength of the exchange rate. Significantly Universal’s export revenue – which is derived mainly from Macadams - increased by 19% to R151 million.

The business also scored from an improved sales mix with Paynter noting that more internally manufactured products were sold during the financial year.

Seemingly the successful shift into new premises may have convinced the parent company to loosen its purse strings and make further investments in Macadams’ capacity.

Paynter says Universal invested a further R9 million in new plant and equipment.

The additional capacity from the capital equipment investment will reduce lead times and increase capacity to meet customer requirements, in particular the bakeware division supplying baking tins and pans.”

Perhaps additional capacity is prudent with Paynter reporting that enquiry and activity levels across the group’s operations are encouraging and are expected to continue into the coming year.

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