Afrimat maintains sustainable growth
JSE open pit mining and materials company, Afrimat maintained steady growth for the six months to August 2014 ("the period"), reflecting the group's successful diversification strategy. Revenue edged over the R1 billion mark for the first time at interims. The successful turnaround of group newcomer Infrasors strengthened the group's performance.
The top line increased 10% to R1,03 billion from R931,9 million at August 2013. Profit after tax grew from R75,3 million to R88,8 million. Headline earnings were up 23.9%, translating into headline earnings per share of 61.1 cents compared to 49,3 cents in the comparative period. Net asset value ("NAV") per share was up to R5,94.
Afrimat declared an interim dividend of 13 cents a share for the period. This is higher than the 11 cents a share interim dividend last year.
CEO Andries van Heerden says he is pleased with the growth across the board given that all divisions contributed to results. "We have managed a pleasing recovery in our traditional aggregates business as well as in Concrete Based Products," he says. "While our cash position is marginally lower than this time last year, the necessary once-off investment in equipment and inventory during the period will improve delivery to customers and reduce manufacturing costs in time."
He says that continued growth in HEPS reflects the positive benefit of Afrimat's 'growth through diversification' strategy. "The group's growing industrial minerals operations performed well. Our initiatives at Infrasors are well on track and we are beginning to realise the strength of its assets."
Mining and Aggregates performed well with the clinker operations excelling. Van Heerden says that he is particularly happy with the performance of the entire group, including the quarries that formed the basis of the group before the diversification into industrial minerals started. "The performance in spite of difficult economic conditions in South Africa, is testimony to the robustness of Afrimat's strategy," he explains." Afrimat has positioned its assets strategically to be resilient in the South African market which can be very cyclical at times. As a whole, the Mining and Aggregates business unit is in a positive position with all plants fully operational to meet supplier demand.
Performance at Concrete Based Products was buoyed by favourable raw material costs, which combined with cost reduction and marketing initiatives to drive an improvement in margins. In the same period in the previous year the business unit had incurred excessive costs as a result of strike action. Van Heerden says he is pleased that this has been resolved.
Looking ahead he says despite a generally constrained macroeconomic environment, the group's markets are positive. He is confident that Afrimat's business development focus will continue ensuring that new opportunities are pursued early, in existing markets and high growth areas. "We invest considerable time and effort in identifying high growth nodes in line with government spending."
The group's intention is to capitalise on opportunities in industrial minerals through Glen Douglas, the Infrasors operations and Clinker Group. Van Heerden concludes that Afrimat is cognisant of the risks associated with each of the group's target markets and is also pursuing further growth options outside the borders of South Africa.
Afrimat's share closed yesterday at R16,40.
Issued by: Nicole Katz/Michèle Mackey
(011) 325 5944 / 082 497 9827
On behalf of: Afrimat Limited
Andries van Heerden, CEO
021 917 8840
Issue date: 6 November 2014