SAFFER

Saffer Bathroom & Plumbing is the leading supplier of locally manufactured and branded plumbing and sanitaryware products to retailers, builders’ merchants, plumbers’ merchants and hardware stores. The product range includes products manufactured by Dawn’s Manufacturing segment as well as by other suppliers.

Saffer is differentiated in the marketplace by its just-in-time break-bulk and supplychain capability which offers retailers, merchants and hardware stores both plumbing and sanitaryware products delivered in any quantities, on a consistent basis, nationally. This allows merchants the benefits of lower stockholding and improved cash flow without compromising service levels to their customers.

The slowdown in the residential development sector impacted negatively on the industry. However, increased commercial development as well as building and construction pipeline activities, together with the resilience of the refurbishment market, ensured that the industry continued to show growth. This resulted in Saffer growing its market share and maintaining its role as an important player in the supply of both plumbing and sanitaryware products.

Even though the industry experienced tough trading conditions, particularly in the second half of the review year, Saffer managed to continue to gain and maintain market share. Importers experienced supply problems, exacerbated by currency volatility, long lead times and unpredictability of demand, which created opportunities for Saffer, on which it capitalised.

While Saffer is involved in the building and infrastructure sectors, it is suffering from the decline in the residential market and has not as yet benefited greatly from the expected increase in low-cost housing.

While business into Namibia and southern Angola experienced an upward trend, the market in Botswana which saw a decline earlier in the year, is only just recovering. There has been more activity in Zimbabwe where trade appears to be normalising slowly.

Despite the stronger Rand supporting increased imports, Saffer found a slowing demand for direct imports, with customers’ cash flows under pressure and consequently switching demand to local suppliers and brands.

Saffer benefited from the sale of its strong local brands, supported by the easy availability of spares and its excellent after-sales service and has consequently been able to maintain margins whilst growing market share.

Saffer has increased its basket of products and, by adopting in-house pre-packaging of plumbing and hardware products, has upped its offering in this sector. Saffer has seen a favourable market reaction to the introduction of Cobra entry-level products. Product concepts for the retail market, for example related to water saving, are under development.

Further cost-savings have been achieved by reducing headcount through natural attrition, with positions vacated not being filled.

The new Germiston facilities are enabling Saffer to react more quickly to market developments. Shared facilities are promoting quicker decision-making and contributing to cost savings.

As with most organisations in South Africa, the shortage of key skills is a challenge and Saffer is also faced with the constant need to keep skills upgraded. Retention schemes and succession planning are being revitalised to deal with these issues. Saffer also constantly reviews and encourages individual performance with appropriate incentives. A new incentive scheme has been introduced for representatives which aligns Saffer more closely to current market trends. This is supported by more intensive staff training around the theme: “Great people deliver great value”.

The great need for housing for the lower income groups, government’s infrastructure spend to upgrade facilities and the spend for the 2010 FIFA World Cup stadia, together with related accommodation and transport facilities, will ensure ongoing growth in the industry.

The renovations market is expected to show growth in the coming year, mainly as a result of people choosing rather to upgrade properties than sell in the poor market conditions currently prevailing.

Significant value drivers are the wide range of local, branded, quality products it offers to the market at competitive prices and in smaller quantities which allow merchants and retailers to limit their stockholding, improve their cash flow and have stock available on a just-in-time basis.

The Group’s investment in infrastructure as well as in warehousing and distribution capabilities ensures that it has an efficient, cost-effective supply-chain capacity that can handle large volumes of stock and distribute this to the customer at the most competitive price in the market.

Constraints are experienced with government delays to settling debts to contractors, and pressure on customers’ cash flow continues to be a challenge as insurers tighten their requirements. Consequently, rigorous control is exercised over the debtors’ book.

In terms of growth strategies, Saffer intends entering markets previously dominated by imports, increasing the range of its products.

Saffer will focus specifically on management in the field, building stronger relationships with customers by ensuring that representatives call on a regular basis, exceeding customer expectations with service and guaranteeing just-in-time bulkbreak deliveries. This will assist customers in saving costs and increasing efficiencies through smaller stockholdings and more frequent orders in smaller quantities.

The introduction of product clusters will enable Saffer to leverage greater synergies and will lead to innovation, cost savings and a more holistic approach to sales, offering different packages and identifying changing trends in the market