AECI lifts headline earnings by 10 percent
CHEMICAL and explosives group AECI yesterday said that it had lifted its headline earnings per share a solid 10 percent to R11.50 in the year to end December with all operating segments achieving growth. The group said its revenue also lifted 6 percent to R24.8 billion, while profit from operations climbed 2 percent to R2.03bn.
It said it would pay a final ordinary cash dividend of 414 cents per share –13 percent higher than the 366c in 2018 – bringing the total payout for the year 11 percent higher at 570 cents.
Chief executive Mark Dytor said in an interview that the group underwent a great deal of restructuring over the past year in the water and mining focused businesses, with more to come in other operations of the group. He said that the country’s gross domestic product growth, power supply constraints, high unemployment and subdued consumer demand, however, continued to be challenges.
Inclusion of results from Schirm and
Much Asphalt for the full 12-month period accounted for 2.5 percent of the increase in revenue.
Some 40 percent of the revenue was generated outside South Africa.
Most foreign revenue amount was generated by Mining Solutions’ operations in the rest of Africa and denominated mainly in US dollars, in addition to the contribution from Schirm, which generated dollar and euro based income.
“With GDP so low in South Africa, we have to look to other areas to find growth,” Dytor said.
Earnings before interest tax and amortisation was 26 percent higher at R3.33bn, with much of the increase attributable to profit realised on the sale of Crest Chemicals and the effects of IFRS 16.
The receipt of sale of the 50 percent shareholding in Crest Chemicals and the receipt of proceeds of the sale of land in Modderfontein in the second half of the year were not included in the headline earnings per share.
There was also a goodwill impairment of R147 million in the Food and Beverage segment.
Mining Solutions, Water and Process and Plant and Animal Health operations recorded higher profitability. Business realignment projects started in 2018 in the Explosives business and in Water and Process delivered to expectations. The performance in Food and Beverage and Chemicals disappointed.
Gearing, excluding the impact of IFRS 16, was at 31 percent. The group planned to bring this down to the mid-twenties in 2020, said Daytor.
AECI shares rose 3.03 percent on the JSE yesterday to close at R102.