AECI seeks to pursue growth on continent

Economy curtails trading

CHEMICALS giant AECI has cast its eyes on the continent to boost its growth prospects as local operations continue to struggle.

AECI said yesterday that it had targeted west and central Africa as demand for cobalt and copper pushed mining activity in the regions.

AECI chief executive Mark Dytor said the demand saw the group’s explosives volumes in the rest of Africa rising by 10.6 percent during the six months to June and drove up the sales level of sulphuric acid in its chemicals pillar.

“The ramp-up of new contracts in Francophone West Africa also contributed. In Australia, higher sales and the deployment of reactive ground technology at a large mine also assisted the performance of mining solutions,” Dytor said. “Volumes in the Asia-Pacific region as a whole were up by 47 percent.”

Dytor said the group’s underlying businesses performed well during the period with the exception of the water and process division that dipped as a result of the drought in the Western Cape.

He said the water and process revenue declined to R678 million from R707m last year and profit to R80m from R82m.

Stagnant economy Dytor said while trading remained curtailed by the stagnant economy, the group remained hopeful that the situation would change.

“Conditions in the local economy, including the mining and manufacturing sectors, remained depressed in the first six months of the year and the effects of the drought in the Western Cape persisted,” he said.

“The positive changes in the political environment at the end of 2017 have not yet translated into accelerated economic growth and a step change in the short term appears unlikely.”

The group said its plant and animal health division recorded a 297 percent increase in operating profit to R115m during the period from R29m last year, boosted by its acquisition of Schirm.

The group said it acquired Schirm for €110.5m (R1.72 billion), effective from February.

It said that the acquisitions had a combined 10 percent positive overall effect on headline earnings and Schirm’s profit from operations included a once-off net gain of R32m.

“Teams across all of the group’s disciplines have been active in closing the acquisitions and integrating them into AECI in terms of systems, culture, policies and standards.

“This complex process is expected to be largely completed by the end of the current financial year.”

Overall the group increased its revenue by 24 percent to R10.47bn and profit from operations by 35 percent to R911m.

Headline earnings also improved to R483m, up from R407m and this was in line with the 19 percent growth in headline earnings a share to 458 cents a share.

The board declared an interim cash dividend of 149c an ordinary share, up 8 percent from 138c last year.

Dytor said the group would maintain the growth trend through generating and managing cash, clawing back working capital, finalising the integration of its acquisitions and extracting the value expected from them, and capitalising on opportunities for synergies within and across its businesses.

He said that growth in South Africa’s gross domestic product would require good road infrastructure and the company remained positive that investment would occur in the foreseeable future.

AECI rose by 1.93 percent on the JSE yesterday to close at R105.17.