Restructure robs Afrox of some of its Heps oxygen
JSE-LISTED African Oxygen (Afrox) expects to report a decline in its headline earnings per share (Heps) for the year to end December, negatively impacted by restructuring costs, impairment and higher costs due to a once-off major plant breakdown.
As a result, Afrox expects its Heps to decline to 150.5 cents a share and 174.3c, reflecting a decline of between 13.3 percent and 25.1 percent compared to last year’s Heps of 201c.
The group said the 2018 restructuring cost was R24 million and it also made a R58m provision for restructuring in the 2019 fiscal year. Afrox also incurred a R55m impairment of assets as a result of the restructure.
The group is also involved in the process of restructuring its business.
“In the execution of the company’s ongoing restructuring, the company will strengthen its operating model, reduce its fixed cost base further and allocate resources to areas of future volume growth,” the group said.
Afrox said the primary objective of the restructure was to further improve its organisational effectiveness, customer satisfaction and the need for integrated solutions across Sub-Saharan Africa.
It added that it expected this to enable it to continue its targeted growth in earnings in the future.
Afrox operates in South Africa and in eight other African countries and it is southern Africa’s market leader in industrial gases, liquid petroleum gas and welding products.
The group also expected its basic earnings per share to decline during the period. It expects it to be between 139.3c and 161.3c, reflecting a decline of between 20.8 percent and 31.6 percent, compared to 203.6c reported last year.
Afrox said it had reviewed its operating model to enable continued growth in earnings.
The group aimed to extract further efficiencies by refining its go-to-market approach, the continued centralisation of support functions, continued integration of production and distribution and optimised supply and distribution.
Afrox expects to release its results on or about March 4, 2019.
African Oxygen’s share price closed 1.22 percent higher at R28.25 on the JSE yesterday.