Revenue was 6.6% higher at R1.65 billion‚ but operating profit was 33.1% lower at R128.4 million.
Operating profit from tiles declined 39.4% to R105.6 million‚ while the sanitaryware division grew operating profit by 29.5% to R22.8 million.
Due to the terms of the offer received from Italtile‚ the company will not pay a dividend. If, however, the bid is not successful Ceramic will pay a dividend in line with the group's dividend policy‚ it said.
Italtile and Rallen (Pty) Ltd have made an offer to shareholders of R130 per share‚ cum dividend‚ for the company.
Trading conditions in the group's South African and Australian markets remained difficult‚ characterised by continued intense competition from cheap imports and limited investment in residential housing by the public and private sector as low levels of confidence prevailed‚ reflecting global economic uncertainty.
CEO Nick Booth said the local tile operation‚ comprising Samca Wall and Floor‚ Vitro and Pegasus factories‚ regained and retained market share‚ but at the expense of margins.
"Despite reporting record sales volumes‚ profitability was reduced as a result of above-CPI price increases on core input costs for gas‚ electricity and glaze; and a deliberate strategy employed in the first half of the year to contain product price increases to combat price pressure in the local market. Average selling prices (ASP) remained in line with 2011 levels‚ eroding margins from 12.4% to 7.8%‚" he said.
He added that while market share lost in the prior year was regained‚ operational inefficiencies hampered the ability to fully restore capacity to meet increased new demand. The factories operated at an average capacity of 92% for the period.
The disappointing performance delivered by the SA operation was compounded by further deterioration in the Australian business‚ Centaurus. This operation‚ which contributes 12% of Ceramic's turnover‚ reported an operating loss of R44.7 million.
Ceramic's sanitaryware division‚ comprising the Betta and Aquarius operations‚ improved on the sound performance delivered in the prior year‚ despite subdued market conditions.
Production and sales volumes increased‚ while intensive cost containment and increased sales of higher value products resulted in an improved margin‚" noted Booth.
Looking ahead‚ the group expects current trading conditions will prevail for the foreseeable future.
"There are no evident signs of significant investment in the new residential housing sector and whilst some activity will continue to be experienced in the renovations market‚ the new build segment will remain largely stagnant‚" noted Booth.
"Management's challenge will be to capitalise on opportunities within the current environment and within our operations. Opportunities exist for the Group to regain market share and reduce losses in the Australian operation‚" he said.
"Our efforts will be directed at leveraging remedial interventions implemented over the past year and restoring consumer confidence through consistent delivery of high quality fashionable product in line with market demand."
"In addition‚ sub-Saharan Africa continues to provide growth potential for the Group‚ with strong demand experienced for Ceramic's offering‚" he added.
While current Rand weakness should favour consumption of local product versus imports‚ margin growth will be constrained as a result of anticipated increases in dollar-linked input costs of gas and glaze.
"Management's priority focus will be on improving efficiencies in the factories and enhancing our product range to meet demand in terms of volumes and quality‚" Booth concluded.
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