| Attributable income 6% above budget and up 25% |
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Steinhoff Europe remains a leading supplier of
household goods and related products in the United
Kingdom, Europe and the Pacific Rim.
In line with the
group’s global strategy, the target is to add value to
the supply chain through selective manufacturing,
sourcing and distribution including logistical services
and, where feasible, retail to the ultimate consumer. |
MANAGING DIRECTOR | Markus Jooste
GROUP FINANCIAL DIRECTOR | Jan van der Merwe
FINANCIAL DIRECTOR | Siegmar Schmidt |
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| Divisional management |
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| UNITED KINGDOM Ian Topping (47) CEO MA, MBA | Philip Dieperink (51) FD BComm (Hons), CTA, CA(SA), Hdip Tax | David Shaw (55) MD: Furniture supply division | Andy Murdoch (55) MD: Pritex | Ad van der Horst (54) MD: Norma Nima c marketing |
Bill Carrahar (44) MD: Beds division, Homestyle |
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| GERMAN REGION Frank Eberle (44) MD BBus Admin | Gerrit Venter (34) FD CA(SA) | Thomas Schmidt (44) Marketing | Thomas Möller (46) Case Goods | Michael Miebach (43) Upholstery | Uwe Smidt (46) Logistics |
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| EASTERN EUROPE Andreas Bogdanski (45) MD Econ (Cum Laude) |
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| NETHERLANDS, BELGIUM, FRANCE Paul van den Bosch (45) MD VEcon, MBA | Jan Bertrand (54) Financial Controller QC HOFAM Accountancy | Danny van den Bosch (42) R and D/Buying | Bernd Niessen (42) Logistics and operational | Frans Herman (51) Marketing Nevi purchase/Nima
marketing |
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| PACIFIC RIM Geoff Mcintosch (53) MD: Retail | Michael Gordon (41) MD: Group Services BAcc, CA(SA), CA(Aus) | Tim Schaafsma (34) Director and secretary LLB, ACIS, Solicitor | Leo Watling (41) Freedom Australia | Debbie Riding (38) Freedom New Zealand |
Italo Tius (57) BayLeatherRepublic |
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| INTERNATIONAL SOURCING Tom Huang (33) MD CA(SA) |
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| Income attributable to shareholders
for this division for
the year ended 30 June 2007
was 6% above budget and
25% higher than last year. |
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| REVENUE |
NON-CURRENT ASSETS |
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| Performance |
| This division operates in three distinctive
geographical areas and operating divisions,
namely the United Kingdom, Europe and the
Pacific Rim. Europe is further segmented
into three subdivisions: |
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Benelux; |
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the German region and Hungary; and |
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Poland and Eastern Europe. |
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The overall performance of the division was
good, complemented by the growing intragroup
trading that has increased margins.
The division’s focus on ultimate consumer
brand recognition, through continued
investment in the development and
positioning of intellectual property,
particularly trade and brand names,
continues to benefit margins.
Trading conditions in the industry and the
focus markets of this division remain challenging.
Trading conditions in the retail and household
goods industry in the United Kingdom have
been difficult for some time. This affected
the turnaround of the Harveys’ retail chain
and the repositioning of its product offering
took longer than anticipated.
The German market has recovered from a
declining growth phase, and remains the
largest furniture market in Europe with a
per-capita spend on furniture ranked among the top in the world. However, this market
remains very competitive, with only the most
efficient and appropriately structured
manufacturers being able to trade profitably,
as evidenced by the liquidation of two
significant competitors in the German
region. Our European business has continued
its supplier of choice status, increasing
its trade with customers of these two
competitors. Again, despite tough market
conditions market share grew.
The Eastern European division produces
primarily for the German market and did
well to hedge the group from German
manufacturing pressures. The division is also
responsible for supply into the mail order,
mass-market and discounter market of
Germany, which showed good growth
during the year.
The Benelux division had a good year, aided
by returns from the successful retail concept,
Henders & Hazel.
In Hungary, the division recorded satisfactory
results and retail activities have been
aggressively expanded. The international
model is successfully applied and close to
50% of retail sales are procured or sourced
from the group’s own manufacturing and
sourcing divisions
In Australia and New Zealand, trading
conditions remained subdued as a result of
record interest rates. The Freedom chain performed very well underpinning the
success of the brand renewal project which
commenced in the prior period. A further
review of its performance and brand
penetration, resulted in the closure of several
unprofitable divisions, specifically Bayswiss,
and exiting the food product segment. |
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The International Sourcing operation from
the eastern regions had an exceptional year,
with intra-group supply being twice the level
for the prior year.
Given the synergies realised and margins
enhanced via intra-group supply, a new
division has been created that will incorporate
the International Sourcing division in China
(and Vietnam). This division is responsible
for managing and increasing intra-group
trading, sharing product designs and the
effective and efficient use of intellectual
property, and ensuring that the group
benefits from synergies. |
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| Strategy |
With the evolvement and broadening of the
European Union, Steinhoff’s strategy initially
focused on transferring significant amounts
of production capacity from Germany to
a low-cost environment, predominantly
Poland, and, to a lesser extent, Hungary and
the Ukraine. Simultaneously, the group
developed and acquired the logistical and
sourcing capabilities to serve and maintain
its customer base largely in Western Europe.
Inherent to our strategy is the acquisition,
development and positioning of leading
brands, patents and technology to increase
the product offering and customer base to
include higher-margin branded products
without neglecting the operations that
produce for the mass market.
This group’s retail initiatives in the European
Union are closely linked to its customer
service strategy and are currently based on a
less direct approach compared to our other
markets. Based on the well-known store-instore
concept, essentially the group provides
a retail or studio concept to selected retailers
on an exclusive basis. The studio concept is
fully managed and supported by the group
on behalf of the retailer, and comprises the
Henders & Hazel and Esprit brands.
In addition, Steinhoff Europe has formed
strategic alliances with certain key customers
and takes part in retail investments and
other initiatives that further extend our retail
footprint. The group benefits through profit
participation and profit-sharing arrangements
underlying these initiatives. |
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| Performance |
Revenue at R16,9 million was 16,5% up on
last year. This was despite the effect of
factors such as Harveys in the United
Kingdom, where turnover was purposefully
reduced in order to improve margins, and the increased intra-group sales which led to
the elimination on consolidation of turnover
in the United Kingdom, Poland, Australia
and New Zealand.
The group’s operating margin remained
stable and improved with 1% on the
prior year.
This satisfactory performance, despite a
difficult year in the United Kingdom, bodes
well for the division’s future performance. |
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