JSE-listed industrial minerals and construction
materials group Afrimat achieved a 56.9% year-on-year increase in operating
profit to R318-million for the six months ended August 31.
CEO Andries
van Heerden attributed the higher profit to an improved performance
in each of its business segments, but especially the bulk commodities segment.
The bulk commodities segment, consisting of the
Demaneng iron-ore mine, continued to deliver a healthy contribution to the
group’s results, accounting for 28.9% of the company’s R1.7-billion revenue for
the six months under review.
Van Heerden said impressive increases in volumes
and favourable pricing supported the segment’s performance.
The industrial minerals business segment reported
strong growth, with operating profit having increased by 50% year-on-year to
R62-million.
The segment’s strong growth was achieved by
entering into new markets, increasing activity, reducing costs and implementing
efficiency improvement initiatives.
Van Heerden mentioned that some open contracts were
still being finalised that would have resulted in an even better performance,
had they been included in the results for the six months under review.
Afrimat also sees potential to add more industrial
minerals to its portfolio, which already includes dolomite, limestone and
silica.
CFO Pieter
de Wit, meanwhile, reported that Afrimat’s net cash generation had grown
at a compound annual growth rate (CAGR) of 41.7% from 2014 to 2019, while its
dividend had grown at a CAGR of 22.6% over the five-year period.
The company declared an interim dividend of 36c
apiece for the period under review.
Construction Material
Following a slowdown in the construction materials segment in the first half of
the prior year, operating profit increased by 6.5% year-on-year to R122-million
for the period under review.
The KwaZulu-Natal business reported improved
results following a successful restructuring process.
The Western Cape aggregates business delivered
solid results in the interim period under review, but the Gauteng business was
still suffering the effects of the economic slowdown.
The Mozambique business continued to supply construction
materials to smaller projects in the northern region of the country, in
anticipation of the major liquefied natural gas project.
Van Heerden noted that he was starting to see a
slow recovery in the construction sector in South Africa, mostly owing to
smaller contracts spread across the country.
“The group is well positioned to capitalise on its
strategic initiatives. We foresee continued growth from an excellent asset base
and further expansion of its range of unique products. The continuation of
selective acquisitions is expected to deliver good results.
“Operational efficiency initiatives aimed at expanding volumes, reducing costs and developing the required skill levels across all employees remain a key focus in all operations,” Van Heerden noted.http://www.engineeringnews.co.za/article/bulk-commodities-boost-afrimats-interim-profit-2019-10-31
