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ELB attributes growing revenue to risk spread across industries

ELB attributes growing revenue to risk spread across industries

Photo by Bloomberg

22nd September 2014

By: Natalie Greve

Creamer Media Contributing Editor Online

  

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JOHANNESBURG (miningweekly.com) – Materials handling group ELB has attributed its solid full-year showing to its diversification across several industries and numerous commodities, which has resulted in the spread of risk rather than a reliance on the health of a single market.

“If you specialise in [materials handling] for one commodity alone, as most consultancy firms of our kind do, your success relies on the rise and fall of that commodity. Because we service several industries, we aren’t subject to the massive peaks and troughs that other companies are,” CEO Stephen Meijers told investors on Monday.

Noting that ELB serviced the mining, power, construction, ports, industrial and minerals markets, he added that the group’s entrenched partnerships with a stable of multinationals further bolstered its resilience in the South African markets, which remained battered by labour strife and depressed manufacturing levels.

“The South African market is not large enough to allow South African companies to establish their own research and development departments, which is why we partner with global companies and leverage their capabilities,” Meijers outlined.

He added that the company’s “responsible” profit-take formula, described by some as “conservative”, had further rallied its bottom line.

The group on Friday released its results for the year ended June 30, reporting an 18% increase in turnover for the year, boosting overall income from R1.9-billion in 2013, to R2.3-billion for the 12 months under review.

Engineering News Online reported, at the time, that profit for the year increased 11%, from R118-million in 2013, to R131-million in the period under review, largely as a result of an increase in the engineering services division’s performance.

ELB declared a final dividend of 67c an ordinary share, bringing the total dividend for the year to 95c apiece.

Outlining key projects, Meijers added that the company had built 13 dense-media separation (DMS) plants at various mines across the country over the last 18 months, making it the market leader in the establishment of these processing facilities.

The group’s JSE-listed subsidiary ELB Engineering Services had also been awarded two plant projects by Kumba Iron Ore to produce lumpy and fine iron-ore product from lower-grade material at the Sishen iron-ore mine, in the Northern Cape, and the Kolomela iron-ore mine, in Postmasburg, also in the Northern Cape.

The group, meanwhile, continued work on the ash and coal handling system at the Medupi coal-fired power station, which Meijers assured would be operational by December.

“We’ll be working on Christmas day and Medupi will be supplying power by the end of the year,” he commented.

ELB was also making good progress on the construction of a 27 km overland conveyor system for petrochemicals group Sasol, which, according to Meijers, would be the longest conveyer belt of its kind in the world.

After being awarded the detailed design and execution contract for the Waterberg Coal Company’s 22-million-ton-a-year coal handling and processing plant at the Waterberg project, in Limpopo, earlier this year, ELB had started with the preliminary design of the project.

“We have also been awarded the maintenance contract at Eskom’s Kendal power plant, as well as conveyer commissioning contracts at Banro’s Namoya mine, in the Democratic Republic of Congo and at Diro Manganese’s Kathu-based mine, in the Northern Cape.

“Our order book for the next two to three years is currently at around R1.4-billion,” Meijers said.

Over the period, the group also acquired electrical and instrumentation business B&W, which bolstered its engineering capability in the oil and gas, chemicals, utilities, energy and infrastructure industries.

Describing Africa as “superbly exciting”, he noted that the company saw good potential for growth on the continent, particularly in the coal, iron-ore, manganese and aggregate sectors.

“We’re in a very good shape going forward in what we see as a very exciting market,” he concluded.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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