Company Report: Argent Group
Steel and beyond As Argent Group prepares for further growth, CEO Treve Hendry tells Construction Digital how diversification is key to its continued success

Argent Group was founded as the Scharrighuisen Group in 1972

Argent Group is preparing for further growth

The company’s diversity is the reason for its success

Argent Group’s CEO, Treve Hendry, has overseen some quite spectacular growth since his appointment to the position in 1998. At that stage, the company was just three divisions. Today, it comprises a total of 32 operations and its growth continues unabated. “Our business is broken up into a number of areas,” Hendry explains. “40 percent of the business is steel trading.”

Meanwhile, 37 percent of the Group is made up of companies that beneficiate or add value to steel, either via manufacturing or through steel service centres. The rest of the Group encompasses a range of industries, including plastics, rubber, concrete, stone, paint, aluminium and stainless steel.

The two newest additions to its portfolio of companies are Tricks-Wrought Iron Services (Pty) Ltd, and Burbage Iron Craft (BIC) Ltd; both of which were acquired in the last year.

Argent Group’s origins date back to 1972, when it was better known as the Scharrighuisen Group, having been started by a family of the same name. They settled in South Africa from Holland in order to pursue several earthmoving contracts. The business developed and was eventually listed on the JSE in 1989.

It was another 10 years before the company changed its name to Argent Industrial Limited. Today, its activities are based in Gauteng, Northern Province, Eastern Cape, Western Cape, Kwa-Zulu Natal, Mpumalanga, North America and the United Kingdom.

DIVERSITY
For Hendry, the company’s diversity is the reason for its success and is why he has remained at the Group for so long. “We’ve diversified, so there’s an exciting problem everyday,” he says. “There are lots of different types of people and different types of industries.”

The fact that the company is so diverse has helped it to withstand the worst of the global recession and emerge relatively unscathed. “It’s done us harm in our current financial year, as with everybody, but it won’t make us a loss,” Hendry says. The steel and automotive industries have seen the biggest fallout from the economic crisis; although there are signs that steel is beginning to pick up again.

“We’ve been affected but because we’re so diversified, we’ve been able to weather the storm,” he adds. “You’ve just got to bolt everything down and wait for the storm to pass.”

TARGETED GROWTH
The government’s investment in South Africa’s infrastructure in preparation for the 2010 World Cup has helped boost the construction industry and, in turn, demand for Argent’s products.

“I don’t think anyone has put any money into infrastructure for quite a few years, so it’s a good thing, for sure, and it will definitely help us,” Hendry says. While the Group has completed most of the projects it was involved in for the tournament, it is readying itself for a flurry of smaller projects closer to the event.

Despite the current climate, the Group is preparing to grow, “both at existing locations and geographically”, according to Hendry. And it is looking at specialising in finished products, targeting low cost housing projects in particular.

“There is a certain size we’d like to get to in comparison to some of our peers in South Africa, and we can definitely do that in the next four years,” he explains. “It’s easy to diversify but you also want to grow your individual businesses into sizeable businesses.”

Hendry says that the Group’s property portfolio has also grown in the last year, following the purchase of a number of properties. It is now worth about R600 million.

As its 2010 financial year comes to an end, Hendry has high hopes for a more profitable 2011. “We’re very confident; we told shareholders that we will improve on our 2009 results,” he says. “Our 2010 results aren’t great because we had the recession – we’ll be about 70 percent down on our previous outlook for 2010. Then we’ll be back on track in 2011.”

As you would expect of a group comprising as many companies as Argent does, each business is left to operate independently of the other businesses. “Our trick is for each company to manufacture its own products and then distribute them through its own branches and intercompany branches where it can, using the inter-company transport,” Hendry explains.

When asked what he thinks is the key to Argent Group’s success, he is quick to acknowledge that it’s the companies’ ability to come together. “It’s getting the expertise in the group, it’s getting the companies to work with each other to obtain the right expertise to be competitive – and it’s worked quite well so far.”

Construction Digital believes Argent Group’s strategy will ensure it has a bright future.

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