JSE-listed Afrimat lifted its headline earnings a share for the year ended February 29 to 156.6c, up 15.5% from the 135.6c achieved in the prior financial year.
“We are very pleased with this solid improvement, which is [owing] to a strong performance from the mineral-producing operations across all regions of the country,” CEO Andries van Heerden said on Thursday.
The group improved its operating margin to 16.3% from 14% the year before, while also improving its cash generation from operations to R320.3-million, from R261.6-million the year before.
Overall cash and cash equivalents increased by 206% year-on-year to R77.4-million as at February 29.
Van Heerden attributed the performance to the company’s diversification strategy, cost reduction and efficiency improvement initiatives, as well as the disposal of marginal businesses in the prior year.
“We have, through our mantra ‘growth through diversification’, continued to successfully focus on our more valuable product lines, which has resulted in higher earnings. This is certainly coming through and ensuring that we are able to deliver strong results.”
He added that the company was pleased with the opening up of margins, “despite the relatively flat market which resulted in revenue of R1.9-billion”.
Contribution from operations increased by 17.5% to R321.7-million from R273.7-million the year before.
Operational Review
Afrimat operated across two main segments, namely Mining & Aggregates and Concrete Based Products. The segments contributed 87% and 13% respectively to the company’s overall results.
The Mining & Aggregates segment benefited from substantial improvements within the traditional aggregates business. In line with Afrimat’s diversification strategy, new greenfield projects were initiated in the Northern Cape, Mpumalanga and Mozambique.
The Concrete Based Products segment was marginally impacted by the flat market resulting in focused initiatives by management to reduce costs and increase market share. These initiatives resulted in more positive results for the second half of the year.
Cape Lime Acquisition
Afrimat received regulatory approval for the R276-million acquisition of Western Cape-based Cape Lime earlier this year. The acquisition was effective in March and will complement and boost Afrimat’s drive in the industrials sector.
To date, this is the largest acquisition Afrimat has undertaken. “In our opinion, this asset offers Afrimat a unique product offering, opening up additional markets in water purification, soil treatment and effluent treatment including the traditional building and construction sector,” explained Van Heerden.