Specialty chemicals group AECI has achieved its highest ever profit from operations of nearly R2-billion for the year ended December 31, 2018.
This was 27% higher than the R1.58-billion profit from operations achieved in 2017.
Profit from operations included R109-million in impairments in the Mining Solutions and Plant & Animal Health operating segments.
Net profit increased to R1.03-billion, from R983-million in 2017.
AECI’s revenue increased by 26% year-on-year to R23.31-billion, compared with R18.48-billion in 2017, as a result of strong performances by the Mining Solutions and Chemicals segments and an improvement in Food & Beverage segment.
The acquisitions finalised in 2018, namely Schirm and Much Asphalt, contributed 17% of the increase in revenue.
Revenue generated outside South Africa accounted for 40% of overall revenue, an increase on the 34% contribution made in 2017.
Further, earnings before interest, taxes, depreciation and amortisation increased by 21% year-on-year to R2.63-billion, while headline earnings increased by 9% to R1.10-billion, compared with R1.01-billion in 2017.
AECI declared a final ordinary cash dividend of 366c per ordinary share for the year.
Presenting the results, AECI CEO Mark Dytor highlighted the “pleasing” performance of the company’s Mining pillar. Higher prices and demand for most commodities drove output in the global mining sector, which benefitted AECI’s businesses that service this industry.
During the period, acquisitions were fully integrated into the group.
The acquisition of Schirm is in line with the company’s international expansion strategy, with Schirm being involved in the provision of formulation services for agrochemicals in Europe; it has long-standing customer relationships with its blue-chip customer base; it invested substantially in capital expenditure in recent years and it is expected that this investment will enable significant revenue growth as well as cost efficiencies.
Further, there are potential synergies associated with the extension of Schirm’s manufacturing expertise to AECI, as well as expansion and supply chain opportunities for the group’s Plant & Animal Health segment as a whole, AECI said on Tuesday.
Meanwhile, the results of Much Asphalt were consolidated into AECI’s Chemicals segment’s results from April 2018, with Much Asphalt operating as a standalone entity.
Much Asphalt is a South African asphalt producer, servicing a range of customers engaged mainly in road construction and maintenance activities.
The transaction was in line with the group’s strategy to diversify the markets in which it operates.
Meanwhile, the company also achieved Level 3 broad-based black economic empowerment contributor status during 2018.
The group's priority in the coming year will be on ensuring its recent acquisitions deliver financial performances in line with expectations and that the newly acquired asset in Brazil is integrated into Mining Solutions as quickly as possible once the transaction has been finalised.
In 2018, the company announced its acquisition of the Dinacon Lorena plant, in Brazil, for $6.3-million.
Successful execution of realignment projects in AEL and ImproChem will also be key, while cash management also remains important.