AECI posts higher full-year revenue and Ebitda, declares dividend

1st March 2023

By: Schalk Burger

Creamer Media Senior Deputy Editor


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JSE-listed industrial and mining chemicals company AECI grew its revenue for the financial year ended December 31, 2022, by 37% year-on-year to R53-billion driven by significantly improved sales in AECI Mining, AECI Water and AECI Agri Health on the back of increased demand.

"The group delivered solid results in an environment of high inflation, subdued global growth and high commodity prices," the company said on March 1.

Earnings before interest and taxes (Ebit) were flat at R2-billion, as it included the significant operating loss of R228-million and the right-of-use asset and an impairment of property, plant and equipment of R445-million related to the AECI Schirm Germany business, it noted.

AECI’s earnings before interest, taxes, depreciation and amortisation (Ebitda), however, increased by 16% to R3.5-billion and headline earnings a share increased by 15% to R12.87.

However, earnings a share were down by 22% to R8.78, mainly impacted by Schirm Germany’s performance, and the group's gearing had increased to 45% from 24% in the 2021 financial year, it said.

AECI's working capital stood at 19% of revenue, up from 18% in 2021, and capital expenditure investment was R1.55-billion, up from R777-million in 2021, with 61% of this, or R952-million, focused on organic growth.

The net asset value per share attributable to ordinary shareholders increased by 6% to R110.27 from R103.84 in 2021.

AECI declared a final dividend of R5.80, 15% higher than the final dividend in 2021 of R5.05 and this increased the total dividend to R7.74, which represents a 13% growth from the R6.85 total dividend in 2021.

Additionally, the group’s total recordable injury rate was 0.15, which is the lowest recorded by the group since it started measurements.

“All the 'zero milestones' were kept at zero, with no major incidents across the areas of occupational and process safety, environment or product transportation. We are well on track to achieve our sustainability targets by 2025,” the company said.

Additionally, the group’s cash generated from operations increased by 17% to R3.84-billion, from R3.29-billion in the financial year to end December 2021.

Further, proactive actions taken by the group to ensure security of supply to the market following supply chain challenges and high raw material prices during the year resulted in elevated levels of working capital, it noted. Inventory increased to R6.7-billion, up from R4.8-billion in the prior year, matched by an increase of R1.9-billion in short-term debt, up from R446-million in 2021.

Cash available from operating activities decreased significantly to R77-million, down from R1.4-billion in the prior year.

“As a result, net debt for the group increased to R5.3-billion, up from R2.7-billion in 2021, which largely explains higher net finance costs for the year. The net gearing ratio for the year was 45%, as expected, given the working capital context previously explained,” it said.

“The group’s long-term covenants remain well within the target cover range of 2.5-times Ebitda, at 1.5-times Ebitda, up from 0.9 times Ebitda in the 2021 financial year.”

AECI Mining achieved a record performance by growing its revenue by 51% on the back of strong market share gains, export growth in mining chemicals and increased chemical commodity prices, and 67%, up from 64% in 2021, of the segment’s total revenue was generated outside of South Africa.

Consequently, the segment's Ebit increased by 36% and its Ebitda by 29%.

Further, AECI Water grew its revenue by 31%, supported by market share gains in exports and South Africa as well as increased sales to existing public and industrial sector customers. Water sustainability projects contributed 6% to revenue.

AECI Water Ebit was impacted by market sector sales mix and cost impact as a result of delays in price implementations at major customers owing to contract pricing formulas, the company highlighted.

Meanwhile, AECI Agri Health’s revenue was up 17% to R7-billion from R6-billion in 2021. However, the segment recorded a loss before interest and taxes of R297-million, compared with an Ebit of R179-million in 2021, owing mainly to the impact of the AECI Schirm business performance.

“Excluding AECI Schirm, revenue was up 19% supported by sustained higher commodity prices and continued strong demand following favourable climatic conditions, export sales as well as an increased mix of in-house formulated products, while Ebit increased by 19% to R306-million,” the company noted.

Further, AECI Schirm USA delivered to expectations with Ebit up 31% to R101-million on the back of growth in sales aligned to the continued growing demand in agrichemicals.

AECI Schirm Germany, recorded an operating loss of R228-million which triggered a right-of-use asset and property, plant and equipment impairment of R445-million.

“The board-approved comprehensive turnaround project is expected to deliver commercial recovery, including clearly defined milestones and details associated with the required one-off costs. Notably, high-priority actions have been taken and we expect one-off costs to impact 2023 earnings. The board expects positive earnings contribution within 20 to 36 months,” AECI said.

AECI Chemicals, meanwhile, increased revenue significantly by 32% on the back of increased demand and high commodity prices. Its Ebit was negatively impacted by margin pressure in industrial chemicals from high sulphur prices and pass through pricing at the customer, foreign exchange impacts in the food and beverage business. Good cash was delivered by the segment, the company said.

Further, AECI Much Asphalt exhibited marked improvement in performance for 2022 on the back higher sales volumes. Its revenue increased by 37%, while Ebit increased by 21%.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online



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