A revamping of products and services at consumer electronics specialist Seartec appears to point to an increasingly important role for the Branded Products Division (BPD) in the corporate life of iconic Cape Town investment company Seardel Investment Corporation. Seartec, which is 100% owned by Seardel, is a distributor of the Sharp range of office automation products and scientific calculators throughout southern Africa.

Late last year Seartec saw a management shake-up that saw Mark McChlery and entrepreneur (and former Springbok rugby captain) Bob Skinstad appointed by Seardel as executive directors. Their brief was to reposition, reinvigorate and reengineer the Seartec brand, and will take up the positions of CEO and chief marketing officer respectively.

Since November last year, McChlery and Skinstad have fast-tracked a number of developments and changes throughout the business – including overhauling the product range, taking products online and opening e-commerce capabilities as well as investing in a data centre and cloud office portal. The bottom line is that McChlery and Skinstad are positioning Seartec as a technology company rather than a product company that which offers solutions to businesses and consumers.

The duo has already acquired two further businesses to operate under Seartec. These are aimed at offering integrated solutions to Seartec clients, and take in Limtech (a supplier of CCTV, access control and security solutions) and Officebox (an online supplier of stationery and office products.)

The shift at Seartec makes sense, since Seardel CEO Stuart Queen in 2013 pointed out that the performance of the BPD was key to the revitalisation of the group’s overall performance and remained an area of strategic focus.

It’s early days, but it would seem the new executives are making their mark. In the year to end March 2013 the BPD segment recorded revenue growth of 20% to R795m, but saw profits more than halve to R15.5m after the performance was negatively impacted by a R7m foreign exchange loss (after the previous year’s profits were helped by a R13m foreign exchange gain.) If the currency fluctuations, the BPD’s underlying operating profit was up 12% year on year.

In the year to end March 2104 – a period which included the first five months of McChlery and Skinstad’s tenure at Seartec – the BPD recorded strong revenue growth of 20% to R958m – making the BPD the largest division in Seardel by turnover if the recently acquired media division (which includes e-tv) is excluded.

More encouragingly profit before finance costs for the BPD climbed a whopping 141% to R37m. The one hitch, though, is that Seartec’s operating profit margins remain fairly thin at 3.9%. But it seems Seartec – under its new executive stewardship – is to play a critical role in re-building the margin.

Queen noted in June that Seartec continued to invest in marketing and building distribution platforms in the BPD – with much of this investment being ahead of expected future revenue growth.

“This remains the case, particularly within the Seartec office automation business and Brand ID. We expect operating margins to improve once these businesses find the requisite traction.”

Interestingly the BPD also concluded a transaction to acquire the distribution rights for a number of sporting brands – notably Canterbury, Mizuno, Skins, Karrimor, Dunlop and Slazenger.

CBN wonders if Skinstad might not straddle Seartec and Brand ID as a ‘brand ambassador’ over and above his marketing function?

Source: Cape Business News – Jenni McCann