Afrimat’s solid results keep the group ahead

JSE open pit mining company, Afrimat, today posted solid financials for the year to February 2013, maintaining its growth trajectory in challenging times. Most key performance indicators grew by double digits year-on-year. The group has successfully diversified its product range by targeting the industrial minerals arena and cementing a firm foothold with the post year-end acquisition of a controlling stake in JSE-listed Infrasors, as well as adding the Clinker Group in March 2012.

Revenue for the year grew 34,3% to R1, 3 billion from R996 million for the prior year. Headline earnings were up 28%, translating into headline earnings per share of 76,9 cents, up 22,8% – even after taking into account some dilution as a result of the treasury shares used to part settle the Clinker Group acquisition. The cash generating capability of the group’s operations – R169,8 million for the year, up 16%, is the result of intense focus on a strong cash foundation over the past few years.

In light of the performance Afrimat declared significantly higher dividends of 28 cents a share compared to 19 cents a share for the 2012 financial year.

CEO Andries van Heerden says the group’s performance is the consequence of a ‘heads down’ work ethic and unwavering focus on cash generation and profitability. He adds that the benefit of acquisitions helped boost Afrimat’s performance. “By identifying and accessing new markets and expanding our geographic reach in South Africa, we have given Afrimat a distinct advantage,” he says.

He explains that all operations reported decent profits despite adverse trading conditions in most regions in South Africa. “This was quite an achievement given that input cost increases such as in electricity and fuel further squeezed margins,” he says.

Mining & Aggregates particularly showed the benefits of the group’s entry into industrial minerals with Glen Douglas boosting overall volumes and with the acquisition of Clinker Supplies exceeding expectations. Van Heerden says the optimisation strategy at Glen Douglas is progressing well and the group continues to upgrade equipment to maximise capacity and efficiency. The traditional aggregates business which formed the basis of the group prior to the latest acquisitions, showed a marginal decline in sales volumes year-on-year, although van Heerden says an uptick in the Western Cape construction sector is evident.

The newly acquired S A Block (part of the Clinker Group acquisition) helped the Concrete Products division to somewhat offset volume pressure caused by a labour strike in KwaZulu-Natal.

Afrimat has continued its acquisition trail post year-end by buying 50,7% of JSE-listed Infrasors. The acquisition cements the group’s foothold in the industrial minerals sector and stretches its reach into the country’s northern provinces without the need for more capacity. Van Heerden explains: “We have made an offer to minorities to assume full control of Infrasors. We will use our management and marketing expertise to optimise Infrasors’ assets.” He adds that not much capital outlay will be required to extract value as adequate processing and manufacturing capacity exists.
Looking ahead van Heerden says Afrimat will continue targeting government’s renewed commitment to infrastructure as well as new markets for growth. He concludes: “Afrimat will prioritise raising volumes across the board, trimming costs and improving efficiencies.”

Afrimat’s share closed yesterday at R8,87.

Ends

Issued by: Nicole Katz/Michele Mackey
(011) 325 5944 / 082 497 9827

On behalf of: Afrimat Limited
Andries van Heerden, CEO
021 917 8840
www.afrimat.co.za

Issue date: 9 May 2013