Insimbi’s revenue and profit rockets

Insimbi Refractory and Alloy Supplies presented its interim results to August 2017 at the JSE on Thursday, in the first such event since listing in 2008.

The provider of ferrous and nonferrous alloys and refractory materials to the steel, aluminium, cement and foundry industries has diversified heavily in the past few years. This has dramatically changed the group’s size, complexity and market capitalisation, which is about R630m at present.

“This is out first presentation of results ever. We haven’t really had much to say until now,” said new CEO Fred Botha, who was appointed in June 2017. “We are now hopefully on the path to gaining some recognition from the market,” he said.

The group’s revenue and profit has rocketed in the past year after buying Amalgamated Metals, a recycler of ferrous and nonferrous products.

It has also recently bought Polydrum, a plastics products maker for the chemicals, agricultural and oil industries, among other applications.

Insimbi’s latest acquisitions complement its secondary aluminium smelters in Gauteng and Cape Town and add heft to its exports markets.

Revenue in the six months to August was R1.67bn, or 247% higher than the R480m in the same period in 2016.

Yearly turnover to February 2016 was R955m.

Botha said the group was sweating its asset base, running at nearly 100% across the board. Diversity had given Insimbi counter-cyclical markets. These could ride out commodities cycles off the company’s low cost base, he said.

“We romped through the billion -rand mark. It took seven or eight years,” Botha said.

Most of the growth spurt has happened recently, boosting the company’s supply, logistics and technical support markets. Now, it appears more sustainable global minerals commodities markets will help boost Insimbi even further, after prices for many metals jumped in the past six months.

“It is no secret that the steel industry has been taking strain. But I believe we have gone through the worst,” Botha said.

Insimbi’s earnings were relatively small and it was not likely the group would become an “institutional landmark”, said Ian Cruickshanks, chief economist at the SA Institute of Race Relations. “I think it is too small to be a serious investment proposition. However, I am impressed at first glance.

“You can’t expect the rate of growth to be maintained. But I expect impressive niche market growth,” he said.