The future strategy is based on the key drivers of success of the Wholesale business namely:
- Volume through put;
- margins; and
- Fixed cost management.
Volume throughput will be increased via the following:
- The introduction of the full spectrum of timber products not yet sold by the Wholesale division, e.g. treated and untreated pine and gum poles, the full range of board products, e.g. medium-density fibreboard (MDF) and particle board;
- The demand for certain products exceeds the South African production capacity, the Wholesale division will supplement this demand by importing the necessary demand, e.g. flat boards;
- The development and manufacture of specialised engineered products for the construction and other industries;
- The full utilisation of the treating capacity at the Epping warehouse. The plant is currently working at less than half its capacity, the capacity will be increased through the introduction of treated gum and pine poles into the Western Cape market; and
- Volume will also be increased by expanding the Wholesale division’s footprint into other major markets in South Africa and Southern Africa.
Margins will be increased through the following:
Higher margin products through the optimisation of the remanufacturing facility in Roodekop:
- The remanufacturing plant in Roodekop is geared to manufacture the whole range of moulding products. These are products like ceiling, flooring and other specialised mouldings that generally sell at higher margins than traditional structural lumber; and
- It is also geared to manufacture a whole range of specialised products specific to each customer’s need. These products include pallets, decks, boxes and crates as well as a diverse range of components;
Increased presence in the higher margin market segments in which York currently operates:
- The Wholesale division sells into a wide range of market segments from the smaller walk-in customer to construction companies and the large corporate retailers; and
- margins vary significantly and the focus is to increase the Wholesale division’s exposure to those higher margin segments; and
Focused procurement strategy;
- The margin is determined by both selling price and cost, therefore the purchase price of raw material is as crucial as the selling price.
Cost containment is a key strategy of the Group and will be reviewed continuously in an effort to reduce fixed costs of the division.