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• Feltex Automotive
• Industrial Footwear
• Hosaf Fibres
• Jordan & Co
• Bull Brand Foods
• Glodina

OPERATIONAL REVIEW: GLODINA

Year under review

Glodina continued on its recovery path, recording a 13% increase in turnover and its highest-ever profit before taxation. The ISO 14 000 (Environmental) and ISO 18 000 (Safety and Health) accreditations were simultaneously added to the ISO 9 000 (Quality) certification that it had already achieved. Cotton SA recognised the company’s all-round performance and awarded it the Household Textile Manufacturer of the Year accolade.

A concentrated effort and investment over the past four years to reduce conversion costs and the sourcing of cheaper raw materials has yielded substantially enhanced earnings. Training and empowering of employees contributed to improved efficiencies, productivity and quality.

As a manufacturer of innovative products, investment must be made in modern plant and equipment to meet our customer’s quality, technology and pricing requirements. In 2005 a further R19 million was invested in capital projects predominantly to improve cost competitiveness in manufacturing.

Good growth in the South African economy fuelled strong consumer demand and created a buoyant retail sector. Glodina was able to take advantage of these favourable market conditions.

Glodina continues to be the supplier of choice to the majority of the major retail chains through the provision of a consistently high standard of service, quality and innovation. Major retail chains currently comprise 77% of the total annual turnover, and new store openings and an aggressive marketing campaign will ensure further growth in this sector.

Small independent stores account for 11% of total revenue, but this market segment continues to diminish, losing market share to the retail chains.

In the hospitality sector the larger hotel groups are supplied at national level, while a network of agents and industrial wholesalers covers the small- to medium-sized units. This market segment continues to grow steadily and management attention has been focused on increasing penetration.

An effective marketing strategy has been maintained to enhance the strength of its brands and to entrench its stature as the leading towelling brand in the country.

Strategy

Strategy is concentrated on the following areas:

• Continued focus on service to clients.
• Aligning production capacities to sales volumes.
• Continued efforts to drive down conversion costs.
• Anticipation of marketing trends and supply chains in a shifting competitive environment.
• Investment in capital projects that will have future economic and environmental benefits.
• Commitment to driving transformation in the workplace through the training and development of staff.

Prospects

Earnings growth is dependent on the sustainability of the favourable market conditions and the ability of the company to service the needs of its customers better than its cheaper Asian competitors. Its strong brand on the back of growth in the retail and hospitality sectors should see continued improvement in Glodina’s margins.