Afrimat holds steady at interims
JSE materials supplier Afrimat held earnings growth steady for the six months to August 2011 (“the period”) with HEPS at 29,8 cents. Revenue grew 11% to R506,7 million. Cash from operations increased 54% off the back of stringent working capital management. The group’s geographical and product diversity enabled Afrimat to exploit available opportunities in a still tough business environment and mitigate waning demand in certain regions and markets. Recently acquired Glen Douglas, which successfully expanded Afrimat into industrial minerals, proved its mettle and contributed well to results.
Revenue increased to R507 million from R456 million last year. HEPS maintained constancy year-on-year despite a marginal decline in headline earnings. The group declared an interim dividend of 6 cents a share on a par with last year.
CEO Andries van Heerden says the results are satisfactory in light of generally still challenging conditions in the building and construction sector. He qualifies this by adding that small pockets of improvement are emerging. The group’s key division - Mining & Aggregates – remained the major driver of results. “Mining & Aggregates is performing very well in terms of volumes, especially in the Western Cape where we have secured a number of new projects,” he says. He explains that the market for road building aggregates was buoyant nationally during the period, but specifically in more remote areas. “Demand from infrastructure projects such as power stations also escalated towards the end of the period, recovering from labour unrest at customer sites earlier in the year,” he adds.
Local government housing projects proved a boon for the group and boosted volumes in the Readymix and Concrete Products divisions across the country.
Van Heerden says the group’s optimisation strategy at Glen Douglas is paying off and the mine is expected to become the largest in Afrimat’s portfolio. “The good performance for the period affirms the viability of Afrimat’s diversification into industrial minerals as an alternative material for supply.”
He remains confident that Afrimat’s widening of focus from exclusively large scale infrastructure projects was the right move, borne out by the continuing trend in the market towards more dispersed, smaller projects in remote areas. “In this regard our wide geographical footprint and mobile crushing capability are proven advantages.” He is optimistic about the path ahead given the group’s cash-flush position and some exciting acquisition opportunities. (Afrimat is currently trading under cautionary.) Van Heerden concludes positively that Afrimat’s ability to accurately determine new growth avenues, together with ongoing product diversification, should continue to bolster volumes and generate growth.
Afrimat’s share closed yesterday at R4,25.
Nicole Katz/Michèle Mackey
(011) 325 5944 / 082 497 9827
On behalf of: Afrimat Limited
Andries van Heerden, CEO
021 917 8840
Issue date: 3 November 2011