Afrimatexpands in Mozambique

AFRIMAT has commenced operations in Mozambique as part of a strategy by the listed open-pit mining and materials company to diversify geographically and enter new markets in Africa.

It has also increased its shareholding in listed building materials firm Infrasors to 92 percent and is planning to make an offer soon to buy out the remaining minority shareholders, which, if accepted, would also lead to Infrasors being delisted from the JSE.

Andries van Heerden, the chief executive of Afrimat, said yesterday that it had been very cautious about expanding into Africa, but had started a greenfields operation in the northern part of Mozambique in the second half of its financial year to February.

He said it was still in the investment phase and about 60 percent through the first phase, with just over R10 million invested to date.

Van Heerden said Afrimat was attracted to Mozambique by several upcoming projects, including in natural gas and roads projects.

He said Afrimat was proceeding very cautiously with the expansion into Mozambique and it would take the rest of this financial year to stabilise this business, install the capacity and get everything up and running, but hoped it would be running profitably by next year.

“The moment we can start repatriating profits out of there then we could talk about the next one (country). We would rather go too slowly and do it properly than to rush and burn our fingers,” he said.

Van Heerden said Africa was about the last under developed part of the world and a very good living could be made out of working in Africa if managed successfully. “But it’s difficult and something that must be done with great care. We are not hanging the business’ future on it. The other factor is that there is more negative sentiment around South Africa and we want to diversify our own risk.”

Afrimat yesterday reported a 24 percent growth in headline earnings a share to 135.6c in the year to February from 109c in the previous year. Revenue rose 5 percent to R1.99 billion from R1.9bn. Operating profit increased 22 percent to R280.1m from R229.7m.

A final dividend a share of 37c was declared to boost the total dividends for the year to 50c, which is 28 percent higher than the 39c declared in the previous year.

Van Heerden said they were extremely satisfied with the performance of the group and the drive for growth through diversification was clearly paying off.

He said the year was also underpinned by increased government expenditure on road maintenance and smaller service delivery projects, which Afrimat was able to benefit from because of its extensive geographic footprint.

Shares rose 2.37 percent percent to close at R18.12.