Afrimat sustains growth in tough economy
As announced earlier today Afrimat has achieved growth in earnings per share ("EPS") and headline earnings per share ("HEPS") for the six months to August 2010 of approximately 3% and 1%, respectively, despite a tough business environment in the first half of the interim period.
CEO Andries van Heerden says management is pleased with this performance in light of challenges which restricted further growth. These included harsh trading conditions and the new Mineral and Petroleum Resources Royalty Act, the latter which heaped increased expenses on the group and diluted HEPS by 3,8%. The BEE transaction announced earlier this year diluted HEPS by a further 4,3%.
Of the group's key operations, Mining & Aggregates and Contracting again proved the stellar performers. Van Heerden says Afrimat's flexible service model utilising mobile equipment is positioning the group to become the established leader in contract crushing.
Mining & Aggregates maintained a strong performance. Although the Gauteng Freeway Improvement Project (GFIP) contracts are due to complete shortly, Mining & Aggregates remains a key provider of materials in various markets and has secured a number of major roads contracts around the country. Van Heerden says the market in the Western Cape has plateaued and is no longer on a steep descent. "Afrimat operations in this region are stable, holding their own and still contributing to group revenue and profitability."
Readymix Concrete remained under pressure during the interim period, while Concrete Manufactured Products recovered to an extent and delivered results only marginally lower than the comparative period in 2009.
The acquisition of the Glen Douglas mine remains subject only to rubber stamp approval from the Department of Mineral Resources. Pending this, Afrimat has seconded management resources to the mine where they are assessing the business model and future improvement and growth opportunities. The acquisition will provide Afrimat with the platform to expand and diversify into the industrial minerals industry, supported by good prospects in this market at another of Afrimat's quarries.
The group will publish its interim results on or about 8 November 2010.