PFE International rides out the storms during 2017

HR-10-DrZarrebini e-mail.jpg

British Investment Group, PFE International, which has invested hundreds of millions of rands in Durban-based Van Dyck Floors, Hammarsdale based PFE Extrusion and tyre recycling plant, Mathe Group, since it put down roots in South Africa in 1995, had confronted a number of hurdles during 2017.

These include the massive storm that tore across Durban resulting in R15 million in damage to its manufacturing plant in Prospecton, a poor economy and the collapse and liquidation of government’s tyre recycling initiative, REDISA which supplies its tyre recycling initiative. 

“The storm resulted in extensive damage to the property and to the buildings but the setback in servicing clients was minimal. We were fully functional again within two days of the flood. There was extensive damage in the area to roads, businesses and buildings which will no doubt take several months to repair,” says CEO, Dr Mehran Zarrebini. 

Dealing with the stormy political landscape and the related economic fallout has been far more challenging. Aggressive investment in new plant and product across the group from 2015 to 2017 may now level off as the company looks to improving efficiencies and using up spare capacity to optimise performance and profitability. 

Zarrebini is forthright about the economic landscape.

“The pressure on consumers will continue and we don’t expect any dramatic changes for the South African economy.  This has put pressure on the business sector.  When, like now, there is uncertainty, it changes one’s view of investing in South Africa. Like other international investors, political factors that affect the macroeconomic decisions that are made has made us a bit more wary. However, as we continue to invest in South Africa, our long term perspective remains positive, yet the focus is on building for resilience and not only performance,” he admits. 

But he is also positive about the performances of the group’s three divisions during these tough times.

Starting with Van Dyck Floors, which includes the company’s carpeting brand as well as wooden and laminate flooring, new rubber flooring solutions and leading international artificial grass brand, Easigrass, Zarrebini says there have been a number of positives.

Artificial grass has done very well in 2017 and is expected to continue. The drought in both KwaZulu-Natal and Cape Town made consumers more environmentally aware and prepared to invest in products that will help conserve water.  

He says that the hard flooring market has grown with the strong changes in consumer patterns. “Whilst consumer preferences change with time and there are changes with respect to fashion, design and colour, carpeting still represents a large portion of our business. There is no doubt that hard flooring and, in particular, Luxury Vinyl Tiles (LVT) and laminate flooring, remains popular. But many of the more differentiated and unique products manufactured using soft touch yarns are popular and are a growing sector of our business. Certainly, carpeting remains popular in the bedroom due to the comfort underfoot and the warmth benefits. However, the interesting aspects of combining soft and hard flooring with different colours and designs makes carpeting a very versatile product not only in the bedroom but also in different areas of a residential property.”

Zarrebini attributes the good performance of Van Dyck Floors to a differentiated marketing strategy that hones in on markets where disposable incomes are under less pressure.

“The upper end of the market always tends to remain resilient irrespective of the changes within the economy. There is no doubt that the lower end of the market is the first to feel the impact with respect to diminished disposable income and when it comes to residential property, purchases or refurbishment of existing floors are often postponed,” he explains.

He expects a strong performance from Van Dyck Floors in 2018 as this year’s R10-million investment in upgrading processes begins to filter through. There are also plans to launch a number of new carpet ranges for both the residential and commercial sector and a new hard flooring range in 2018.

“Providing that there is renewed political and economic stability towards the end of the year, we envisage greater consumer confidence which will result in confidence returning to the flooring market in general. We envisage a 10 percent growth in 2018,” he adds.

At the same time, he still expects cross winds in the form of a weak and volatile rand which drives up the prices of raw materials and some finished goods and makes forward projections difficult. 

However, this year, this was offset by the group’s vertical integration and diversification which enabled local manufacture of raw materials such as yarns by PFE Extrusion which supplies the majority of its output to Van Dyck Floors and rubber crumb by Mathe Group which is used in the manufacture of acoustic underlays which are exported to 50 countries. These are in demand in countries where stringent legislation requires the reduction of noise pollution in high-rise buildings and offices. 

The R20 million Mathe Group plant in Hammarsdale, which came on stream at the beginning of February 2016, has grown rapidly and new equipment expected to arrive before the end of this year is expected to increase production by at least 25 percent during 2018. 

Zarrebini says that PFE International would continue to benefit from a weak rand when it came to exports. These have grown year-on year and are expected to continue to climb. 

At present, approximately 90 percent of turnover comes from the local market. However, Van Dyck Floors records 15 percent of sales from 20 different countries including Australia, the USA, the UK, Germany, South Korea, the UAE and neighbouring countries in Southern Africa.  

He said more products from all operating divisions were being approved for international markets. 

New applications for rubber crumb produced by Mathe Group will enable it to develop an export market for both sporting applications (infill for football/rugby fields) and innovative flooring applications. Ultimately, up to 50 percent of production is expected to be sold outside the PFE International group. 

PFE has also been something of a trailblazer when it comes to environmental and sustainability initiatives. Van Dyck’s carbon trust re-certification was received in November thanks to a further 10 percent reduction in carbon emissions during 2017.  This adds up to a 45 percent reduction in carbon emissions since 2012.  This will continue throughout 2018 and into the future.   

Zarrebini says that they were successfully progressing towards meeting a number of local and international standards including ISO 15000 energy and Envirobuild’s Green Tag certification for sustainable building materials.

Caption:  Dr. Mehran Zarrebini is pictured in the Van Dyck Floors showroom in Durban.

comments powered by Disqus


This edition

Issue 410


Leadership_Mag Turning leads into clients is what #PersuadeMarketing specialises in - #Leadership sat down with #JaredKoning, owne… 2 days - reply - retweet - favorite

Leadership_Mag Cranefield College teaches its students how to develop the mindset and behaviour to be collaboratist leaders, with… 2 days - reply - retweet - favorite

Leadership_Mag There is a beautiful tranquil nature reserve in an exclusive Wilderness Lodge tightly nestled in Mount Savannah… 12 days - reply - retweet - favorite