Euromaid and Baumatic owner outlines aggressive growth strategy and division merger

  • McPherson’s recorded sales of $180.6 million (up 17.9 per cent) for the six months to 31 December 2013.
  • Net profit after tax, excluding non-recurring items (such as the Think Appliances acquisition) down 1.9 per cent to $10.2 million.
  • Home Appliances division (15 per cent of total revenue) to be merged with Housewares division (24 per cent).

McPherson’s will drive growth in its Home Appliances business, which includes the Euromaid and Baumatic brands, by merging these divisions with its Housewares brands to unlock synergies. Furthermore, McPherson’s plans on increasing the revenue from its two separate appliance divisions — Home Appliances in Sydney and Think Appliances in Melbourne — through new product development, category and channel expansion and price increases.

A publicly listed company based in southern Sydney, McPherson’s became a major player in home appliances during 2013 through the acquisitions of Home Appliances (March) and Think Appliances (October). In addition to Euromaid and Baumatic, the company markets the IAG, Fagor, ARC and Elica brands through the electrical, hardware and commercial channels.

During the six months to 31 December 2013, McPherson’s home appliances operations contributed 15 per cent of the total revenue figure of $180.6 million. Extrapolated out over a 12 month period, this equates to around $54 million. Although exact home appliance revenue is not broken out in its financial report, McPherson’s does say that the purchase of Think Appliances has added $30 million in annual revenue.

McPherson’s reports that organic sales in its home appliances business is growing 16 per cent year-on-year, not including acquisitions.

In order to drive McPherson’s aggressive growth strategy, the Home Appliances division is to be merged during 2014 with the company’s Housewares division, which incorporates the Wiltshire, and Stanley Rogers cutlery brands, among many others. Housewares represents 24 per cent of McPherson’s business and a sales decline coupled with improved profitability is projected for the future.

A second major component of McPherson’s revenue growth strategy is price increases. Having successfully implemented price increases to its home appliances division in late 2013 — around the time it released an attractive new collection of Euromaid cookers — the company is had indicated it wants to ‘reset’ pricing in response to exchange rate fluctuations.

“In response to product cost increases and the recent weakness in the Australian dollar, we are continuing the process of resetting our price structure,” said managing director Paul Maguire. “We are also reviewing the profitability of all business units, brands and products with the aim of further ‘right-sizing’ our operations, thereby releasing cash for investment in accretive acquisitions and improving our return on funds employed.”

Opinion/Analysis

From the official statements made today by McPherson’s regarding its several home appliance companies and brands, it is clear that an aggressive approach to revenue expansion is on the agenda. The company makes clear under the headline ‘Outlook’ that it envisions:

“Continued growth through: new product development; expansion within existing categories and channels; expansion into new categories, channels and markets; and further price increases.”

Having already demonstrated its commitment to designing, manufacturing and releasing saleable products at targeted markets, albeit price-sensitive volume markets, with its new Euromaid 54 Project, the next stage should involve new products and initiatives for Baumatic.

Traditionally an exclusive or near-exclusive brand for The Good Guys, Baumatic has a great reputation, especially in Victoria, which could be exploited successfully through the hardware and construction channels. Prior to the sale to McPherson’s, rumours circulated in the industry that relations between the old Think Appliances and The Good Guys were becoming strained; the cause being Think’s determination to increase its presence in other retailers, such as its 2013 Venini range that was snapped up by Masters. A quick check on The Good Guys website shows 37 Baumatic cooking appliances currently for sale, while Masters is currently selling 16 SKUs on its website.

If Baumatic’s heretofore non-existent marketing efforts were to be energised around a new range that is positioned slightly above Euromaid, McPherson’s could have a very comprehensive good, better, best story working up through hardware, mass, electrical and premium.

Twelve months ago, McPherson’s had no interest in home appliances. Now it is ready to be a major player.

When I visited the Euromaid offices in northern Sydney late last year, I was told by a member of senior management that the company had been happy to fly under the radar but the time had come to start making some noise. Good to hear.

This author is on Twitter: @Patrickavenell

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3 Responses to Euromaid and Baumatic owner outlines aggressive growth strategy and division merger

  1. Tina O brien Thu 17 Jul 2014 at 5:58 pm #

    Where are the euromaid cooktops actually made? I have been told by a Harvey Norman salesperson that they made in the UK. Is this correct?

    Regards,
    Tina

    • Patrick Avenell Thu 17 Jul 2014 at 7:13 pm #

      Hi Tina,

      Thanks for writing in. My understanding is that Home Appliances, Euromaid’s owner, uses factories in several countries, so the answer to your question will depend on the model. Do you have that information? I can certainly put your question to Home Appliances to find out.

      Thanks

      Patrick
      Editor

  2. Bryan Hornery Fri 22 Aug 2014 at 8:31 pm #

    Baumatic appliances were offered as a package for my new home and we signed a contract on 29th November last year. We are now aware of the Company’s demise and we have contacted all major whitegoods outlets in the Newcastle & Coal Fields region in the past two days, and not one was prepared to offer Beaumatic on basic of quality and service. We then contacted two well known service companies who advised that they too would not recommend the product name. In fairness, before I cancel the appliances, would Beaumatic like to demonstrate their product and service competence. I need to make a decision in a few days. I need to hear from the person who will guarantee the product, not an accountant or a sales person.

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