AECI bets on recovery in commodity prices

AECI, South Africa’s explosives and speciality chemicals company, is betting on the recovery in commodity prices.

It said yesterday that it was pursuing growth through acquisitions after its profit from operations for the year ended December fell 22 percent to R1.3 billion.

The company’s chief executive, Mark Dytor, said the group would focus on maintaining a strong balance sheet to fund future acquisitions.

“Cash management will remain a focus area, as will the pursuit of accelerated growth through acquisitions and the realisation of benefits from strategic value growth initiatives embarked on in the last two years,” Dytor said.

AECI services the mining and manufacturing sectors and has 54 plants in 34 sites across Africa, Southeast Asia and South America. AECI operates two main divisions: speciality chemicals and explosives.

Higher prices The company’s explosives division reported a 7.4 percent increase to R449 million in profits for the period, while its chemicals unit was up 8.3 percent to R1.2bn.

The company said the increase in revenue in the chemicals division was driven by higher prices as a result of the weaker average rand exchange rate to the dollar.

The group’s total revenue for the period increased by 1 percent to R18.5bn, 35 percent of which was generated outside South Africa.

The company had in the past two years been making acquisitions in the food additives and the agrochemicals field as it sought to diversify its operations.

The group made two acquisitions in 2015, buying Farmers Organisation from Rendale Holdings, which was followed by the takeover of Southern Canned Products, a manufacturer and distributor of juicebased drinks and products.

The company’s headline earnings declined by 13 percent to R864m R988m, while its headline earnings per share declined by 9 percent to 818c. It declared a final dividend of R3 per share.

AECI shares rose 5.91 percent on the JSE yesterday to close at R109.46.