“Long-term growth strategy underpinned by diversified asset base in the mining, quarrying, and related industries.”
15 May 2025 – Afrimat, a successful multi-commodity, mid-tier mining company that produces and supplies construction materials, iron ore, anthracite, phosphate, and high-quality industrial minerals, today released results for the year ended 28 February 2025.
“While these results are not as robust as in the past, the entrepreneurial culture continues to ensure sustainability and profitability through strategic focus, careful planning, and meticulous execution,” said Group CEO Andries van Heerden.
“Our long-term growth strategy is underpinned by a diversified asset base in the mining, quarrying, and related industries, and we continue to be renowned for acquiring distressed assets and turning them into profitable and sustainable businesses.”
He added that diversification and efficiency improvement initiatives remain the cornerstones of the Group’s strategy. “Our most recent acquisition, that of Lafarge South Africa, has been integrated successfully. Being our largest acquisition to date, the transaction became unconditional during the first quarter of this financial year.”
Van Heerden further explained that while the traditional aggregate quarries and ash business delivered a solid performance, the cement business incurred losses throughout the year. “Pleasingly though, these are steadily reducing as the cement operations were successfully restored and are now functioning at acceptable levels.”
Changes in the iron ore market, influenced by the Rand value of iron ore exports, and a weaker-than-expected anthracite performance further hindered the results.
While many impacts were not entirely within management’s control, the Group remained highly resourceful. “Substantial work was done to ensure a strong foundation for sustainability and to ensure improved performance in the next financial year,” commented van Heerden.
Financial results
Group revenue increased by 36,7% from R6,1 billion to R8,3 billion, with the inclusion of the Lafarge business. Operating profit decreased by 58,5% from R1 152,4 million to R477,7 million, resulting in an overall profit margin of 5,7%. Cash generated from operations equated to R571,6 million compared to R1 551,4 million, impacted by lower profits and the working capital requirements of the Group.
In the interim results, a gain on bargain purchase of R262,7 million was reported in relation to the Lafarge acquisition, based on the preliminary fair values of the identifiable assets. However, in line with IFRS 3, and as part of the final purchase price allocation within the permitted measurement period, the Group reassessed the fair values of the identifiable net assets acquired. This reassessment led to a downward adjustment to the value of certain assets, based on updated information that existed at the acquisition date. As a result, the previously recognised bargain purchase gain was derecognised, and no gain on bargain purchase is reflected in the final results.
Van Heerden explained that Afrimat was affected by a declining iron ore price, a strengthening Rand, and ongoing limitations on the export rail line. Iron ore volumes sold to AMSA improved well in the second half of the year after offtake was reduced in the first half after a furnace freeze.
“Additionally, there were no anthracite product exports from Nkomati through Mozambique due to border closures, and the cement business faced losses. Furthermore, additional debt to fund the acquisition of Lafarge resulted in significant additional finance costs. This culminated in headline earnings per share reducing from 567,3 cents to 72,3 cents.”
As expected, the net debt: equity position increased to 48,9% (February 2024: 1,4%) due to funding towards the Lafarge and Glenover transactions. The Group remains committed to ensuring strong cash generation to settle the additional debt as quickly as possible.
Operational review
The aggregates component of the Construction Materials segment delivered a solid performance, increasing operating profit by 40,2% to R383,5 million from R273,4 million in the previous year and delivering an operating profit margin of 10,8% (2024: 12,4%).
Van Heerden said that this was mainly due to the successful integration of the Lafarge quarries, the fly ash business, and the readymix batching plants, as well as volume growth.
The cement business incurred losses of R285,4 million. “During the first half of the financial year, the operation contended with known reliability issues at the cement factory, resulting in excessive maintenance costs and limited production. Following the revitalisation of the plant, production is at acceptable, efficient, and dependable levels, but during the second half of the year, the business had to contend with unusually high rainfall, which impacted production in January and February 2025.”
He added that the cement kilns benefited from extensive maintenance and are operating more efficiently and dependably, ensuring that Afrimat can now operate with backup capacity. “Production has steadily improved, and good progress has been made towards achieving the Group’s desired market share.”
The Industrial Minerals businesses delivered a strong and recovered performance. Revenue remained relatively flat from R554,5 million to R575,1 million, however, the operating profit increased by 325,7% from R13,8 million to R58,8 million for the year.
Van Heerden said that the suspension of loadshedding has been positive for both the segment and its customers. “This improved performance is encouraging and has been supplemented by strategic marketing initiatives and significant progress in the agricultural lime and precision farming sectors.”
The Bulk Commodities segment contributed 60,0% to the Group’s operating profit. Both revenue and operating profit decreased by 4,5% and 70,1% respectively from the previous year.
The operating profit for the iron ore mines decreased by 69,8% to R238,1 million from R789,0 million. International iron ore sales were adversely impacted by lower US dollar prices, down by 12,9%; an increase in shipping costs of 7,5%; a decrease in the lump premium of 12,4%; and the concurrent strengthening of the South African Rand of 2,1%.
Exports continue to be impacted by the challenges on the rail line although international sales tonnages increased marginally. However, overall volumes remain 16,5% below Afrimat’s rail allocation, and international iron ore prices have remained lower than last year.
“Domestic iron ore sales remain an important component of Afrimat’s offering and we remain in active discussions with our customer to supply it with innovative raw material solutions to support its long-term sustainability,” said van Heerden.
Local iron ore sales volumes for the year improved slightly and are expected to increase in the new financial year.
The anthracite mine’s revenue increased by 11,0% to R829,1 million from R746,7 million. Operating profit declined to R48,6 million compared to an operating profit of R168,7 million in the comparative year.
Key achievements at the Nkomati Anthracite Mine include the partial receipt of the Environmental Impact Assessment (EIA) for the full Life-of-Mine Plan, and the successful relocation of power lines, graves, and houses. This, along with a reorganised management structure, supports optimised performance. Underground mining operations were also relocated to a safer area.
“Along with the gains from the aforementioned adjustments, Nkomati’s results improved towards the end of the reporting period. No anthracite products were exported in the latter half of the financial year due to the closure of the border with Mozambique, which restricted access to the Maputo port. Fortunately, the border has reopened, and Afrimat has secured commitments for up to 80% of the new financial year’s export volumes.”
The Future Materials and Metals segment further supports the diversification strategy and offers wider exposure than ferrous metals. The segment adds phosphate and rare earth elements to the offering and aligns Afrimat to advancing decarbonisation trends through rare earth elements and improved food security through fertiliser products.
The project processes high-grade phosphate and single superphosphate (SSP). With the SSP plant now operational, fertiliser sales are increasing.
Further testwork on the rare earth element component of the deposit was done with very pleasing results. “The rare earth elements strategy is being refined to ensure a comprehensive understanding of the market and technology. This project is recognised as a strategic development requiring time to achieve its full potential,” said van Heerden.
Outlook
Afrimat looks forward to leaving the 2025 financial year behind, confident that it has established a strong foundation to achieve the more robust results management anticipates in the years ahead.
“May 2025 marks the first anniversary of the Lafarge acquisition. Over the past year, we have successfully integrated quarries, fly ash, and readymix batching plants, yielding excellent results. The cement operations have been restored and are now performing well, with some spare capacity available. Nonetheless, certain costs persist in the cement sector, including the ongoing transition of the ERP system from the Holcim platform.”
Van Heerden further commented that the priority for the Construction Materials segment is to enhance operating margins in the aggregates business through efficiency projects, eliminate losses in the cement business, and advance sales toward the Group’s desired market share.
“Nkomati has turned a corner; however, management remains aware that there is always the possibility of unforeseen geological challenges at the mine. With the EIA in place, the focus will be on the successful execution of Nkomati by optimising the Life-of-Mine Plan. In the first quarter of the new financial year, shipment of exported product has started,” van Heerden said.
He said that the Group is well-positioned to assist in supplying iron ore to both domestic and international markets and to increase its supply by ensuring that it has a spectrum of sources available.
“We also continue to engage with Transnet and participate in the Ore Users’ Forum to assist Transnet as much as possible, and we are encouraged by the private sector participation projects that are progressing at government level.”
The Group has consistently focused on strong cash generation, utilising it to swiftly pay down debt levels, make acquisitions, cover all operating costs, and return excess to shareholders.
“We will prioritise enhancing cash flow to reduce debt levels in line with the historical base,” said van Heerden, adding that Afrimat continues to optimise its operational efficiency across all businesses by utilising innovative technology solutions. “Proven results demonstrate that, with the help of technology, efficiencies and savings give us a competitive edge, ensuring greater profitability.”
Van Heerden concluded as follows: “All of these actions and priorities are only possible with an engaged and healthy workforce. Pleasingly, we have consistently achieved commendable audit scores from external health, safety, and environmental bodies, and this year we achieved an all-time low lost-time injury frequency rate of 0,27. We will continue to prioritise education, learning, and skills development opportunities for employees, while also ensuring that our social license to operate is well supported so that the communities in which we operate can thrive.”
-Ends-
Issued for: Afrimat Limited
- Contact: Andries van Heerden, Chief Executive Officer (CEO)
- Tel: 021-917-8853
- Email: andries@afrimat.co.za
- Website: www.afrimat.co.za
- Issued by: Keyter Rech Investor Solutions
- Contact: Vanessa Rech
- Tel: 083-307-5600
- Email: vrech@kris.co.za
