Trellidor share price slumps

The share price of Trellidor Holdings slumped to its lowest level in almost three years on Thursday as the fixed-security specialist said more people moving into secure estates led to lower demand for its products, while it tries to deal with its debt.

Falling 12.94%, the share price closed at R1.75, near the R1.70 mark last seen in November 2020 as revenue declined 2.1%. No dividend was declared.

“Against a backdrop of increased interest rates, government’s failure to deliver services such as water and electricity, and a generally weak economy, the market for Trellidor’s products in SA has been constrained,” the company, valued at R167m on the JSE, said in its results for the year to end-June.

“Where physical security was previously a priority for households in SA, this is not necessarily the case in the current environment,” it said.

This comes despite Stats SA data showing that housebreaking, the most common crime experienced by households, increased 10% in 2022/23 compared with 2021/22.

Subdued sales of residential property, most prominently in Gauteng, and the growing preference for estate living have also had a negative impact on sales of Trellidor’s traditional product range, the company added.

The group, whose brands include Trellidor, NMC and Taylor, was founded in Durban in 1976 and listed on the JSE in 2015. It produces barrier security products that are distributed in SA, Africa and the UK.

Despite reporting growth in fiscal profit of R3.5m, a big part of this was because Trellidor did not have to contend with the R31.8m one-off costs related to a labour court judgment.

Excluding the impact of the judgment, which stated that the company had to reinstate 42 employees with full back pay and benefits from 2017, earnings per share fell 85.2% year on year to 3.7c.

The company felt the impact of higher interest rates as its finance costs, which include interest paid, rose 55.9% to R18.2m, while it is at risk with its financiers as it breached its debt covenants, restrictions that lenders place on borrowers.

According to the latest result, the company debt to core earnings (ebitda) ratio was 5.1, breaching the covenant of two.

“Given that the group continues to be profit making, despite the underperformance, has provided the lender with financial and operational plans to rectify the breaches and there are no legal proceedings that have been instituted against the group, the board is confident the lender will condone the covenant breaches,” the company said.

THE FIXED-SECURITY SPECIALIST ALSO BREACHED ITS DEBT COVENANTS