With its share price up almost fourfold since early 2001, consumer electronics and electrical goods importer and manufacturer Amalgamated Appliances (Amap) is far and away the sector's top-performing company. Key ingredients that have produced headline EPS growth of 324% over the past three financial years and a 27% return on equity have been vision, determination and a dash of luck.
The vision, pushed by executive chairman Jack Cohen, was to build critical mass and a range of leading brands. This began in 1999 with the acquisition of Tedelex and Empisal and the assembly of a formidable brand range that includes Salton, Russell Hobbs, Remington, Brother, Sansui, Pioneer, Toshiba, Akai and Hoover.
Structuring a group that had trebled in size took time, and EPS were depressed in 2000 and 2001. But the determination to succeed was recognised early on by US appliance group Salton, which acquired an initial 21% stake in Amap in 1999 and increased this to 52% in 2003.
Luck came in the form of a consumer spending boom driven by lower interest rates and, most importantly, rand strength, which has enabled the price of imported electronic goods to be cut by up to 50%. But it's what you make of luck that counts. "We gained an edge by being first to drop prices," says Cohen.
The biggest volume growth has been in home theatre, DVDs and TVs, supplemented by the introduction of new products. And for now there seems no end to the spending spree.
But rand strength has a downside. "It's impossible to export profitably at the current rand-dollar exchange rate," says Cohen. His sights are set keenly on the next wave of innovative electronics products. "LCD-TVs will be introduced this year and I expect dramatic growth in demand."
