AECI realignment projects offer long-term benefits

17th July 2019 By: Marleny Arnoldi - Creamer Media Online Writer

As a result of the strategic realignment projects completed by it in June, JSE-listed explosives and specialty chemicals group AECI expects to report a 22% year-on-year decrease in headline earnings per share (HEPS) for the six months ended June 30.

HEPS were likely to be between 357c and 376c apiece, compared with the 458c reported for the six months ended June 30, 2018.

The company’s explosives business AEL Intelligent Blasting, in the mining solutions segment, and ImproChem, in the water and process segment, in the fourth quarter last year initiated strategic realignment projects at an aggregate nonrecurring cost of R156-million.

The impact of this cost on HEPS for the interim period was anticipated to be around 100c.

The total cost of these projects was R204-million.

AEL reviewed its product and service offering, and the structures that support it, mainly for the South African narrow-reef mining market, which had been declining over several years.

AEL’s realignment will ensure it remains a sustainable and responsible local supplier to the mining industry.

ImproChem realigned its go-to-market model to enhance its capabilities and improve service delivery and efficiencies.

AECI said the benefits of these projects would, during the second half of this year, offset the costs incurred in the interim period.

In future, the sustainable annualised pre-tax benefit is expected to be at least R300-million.

The company will release its financial results on or around July 24.