Integrated Bedding

OPERATIONAL REVIEW
bedding-icons

Manufacture of foam,
fabrics, springs, bases
and branded mattresses

Operating from strategically positioned locations
throughout South Africa and Namibia, the division’s
extensive infrastructure, scale benefits and technology
investments reduce costs and enable the division
to provide products and services to customers at
competitive prices.

bedding-block1
bedding-block2
bedding-block3
bedding-col1-1-new-01
bedding-col1-2-new-01
genessi-01
green-coil-01
bedding-col2-1-new-01
bedding-col2-2-new-01
client-dunlopillo
perfekt-green-01
sleepmasters-01
bedding-row-block1
bedding-row-block2
bedding-row-block3
bedding-row-block4

Business environment

Within the global furniture retail sector, the bedding category has proved to be resilient through economic cycles. It has also remained relatively stable in the South African furniture retail sector, despite volatile and subdued performances in other product categories. A trend has developed toward speciality bedding retail outlets, which has added further support to the sector.

Mattresses and bed bases are expensive products to transport due to their size. As a result, the mattress industry is highly fragmented with numerous regional retail and manufacturing operators. The KAP Integrated Bedding strategy is to manufacture key raw materials centrally using state-of-the-art technology, which provides economy of scale benefits, and to produce innerspring and foam mattresses and bed bases in key regional locations in order to facilitate cost-effective distribution and access to the market. This enables the division to supply national brands in regional locations on a competitive basis.

Commentary

The Integrated Bedding division performed well for the year, showing 12% revenue growth to R1 414 million from R1 268 million in the prior year. The continued furniture retail focus on the bedding category continued to drive volume growth and provided increased opportunity for the division to extract value from its fully integrated business model where it manufactures all of its primary raw materials. The division remains the only fully integrated bedding manufacturer in South Africa.

The division successfully concluded the acquisition and integration of Support-a-Paedic during the year. Although relatively small, it provides the opportunity to access new markets and to build strong brand equity with new and existing brands. This operation performed to expectation for the period.

The division’s operating profit increased by 20%, with margin expansion resulting from further integration driven by volume growth.

Outlook

A bed remains the leading furniture item for first-time furniture consumers. In view of the relatively young demographic profile of South African consumers, it is expected that the retail focus on bedding products will continue and will provide a sound platform for the continued growth of KAP’s Integrated Bedding division. The acquisition of Support-a-Paedic provides access into the independent retail sector, supported by large-scale manufacturing capacity, new technology mattress construction and well-known national brands.

The final equipment installations in the division’s state-of-the-art factory in Johannesburg will be completed during 2019 and will provide well-considered workflow systems, energy-efficient production lines and a near zero waste policy. This will have the effect of increased capacity, reduced costs and improved product construction and quality. This, together with its integration into all primary raw materials and increased investment in its brands, is expected to result in market share gains for the division.

bedding-key-facts

The division remains the only fully integrated bedding manufacturer in South Africa.

Start typing and press Enter to search