Seven years ago Hudaco faced the harsh reality that its key markets, mining and manufacturing, were in fundamental decline. The value-added distributor’s only hope was diversification, a challenge it has met with remarkable success.
“Our growth over the past seven years has essentially been driven by acquisitions,” says CEO Graham Dunford.
It is growth that has resulted in Hudaco lifting annual revenue from R2.5bn seven years ago to what is set to be more than R6.5bn in its current year to November. Operating profit over the past seven years doubled from R300m to R605m.
In Hudaco’s latest half-year to May, acquisitions again played a key role. Excluding acquisitions, revenue would have been down 2.3% at R2.41bn while operating profit would have been 0.8% down at R240m. Acquisitions left revenue up 6.5% at R2.67bn and operating profit up 9.4% at R269m. Since 2010 Hudaco has closed 21 acquisitions, with four in the past financial year and three in the latest half-year to May. Most have been of companies with a strong slant towards consumer products in sectors including automotive after-parts, alternative power, professional communications, security and power tools. The deals have reduced the group’s reliance on mining and manufacturing. In 2010 mining accounted for 24% of group sales and manufacturing 26%. These levels have since almost halved, with mining contributing 13% of sales and manufacturing 16% in 2016. The overall contribution from engineering consumable products fell from 67% in 2010 to just over 50% in 2016. Consumer products upped their ...