Bulk land sale boosts AECI’s earnings to 6%

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Bulk land sale boosts AECI’s earnings to 6%

Explosives and specialty chemicals company AECI’s headline earnings per share (HEPS) rose 6% to 894c for the year ended December 31, mostly owing to benefits gained from the company’s bulk property sale in Somerset West in June 2015, which contributed 230c to HEPS. Speaking at the company’s results presentation on Tuesday, CEO Mark Dytor highlighted the group’s interest in increasing the foreign revenue and moving into additional geographies.

The group’s revenue for the year increased by 9% to R18.4-billion, including 34%, or R6.4-billion, in foreign revenue, while operating profits increased by 7% to R1.7-billion, with R1.4-billion returned to shareholders in 2015. AECI CFO Mark Kathan noted that the company’s property revenue was R922-million, comprising R554-million related to land sales. Transfer processes in terms of the Somerset West bulk land sale were almost complete by year-end and the remaining transfers would be effected in the first quarter of this year. The group still had 216 ha of surplus land for operations in Modderfontein, Gauteng. EXPLOSIVES Meanwhile, revenue from explosives was up 14% at R8.2-billion, while profit from these operations increased by 12% to R418-million. Trading margins were 5.1%, similar to 2014 margins. Overall volume sales for the explosives division increased by 13% and sales of initiating systems increased by 34%. AEL MD Edwin Ludick attributed the increase in the initiating system volumes to the platinum mining industry’s recovery, and new business in the gold mining sector, while AEL’s Isap plant achieved full capacity production. Ludick noted that plans were afoot to debottleneck the Isap plant in future. Ludick added that South African explosives volumes were up 6%, but not without sacrifice, as the group forfeited a R150-million margin. Overall volume sales in Africa told “a good story”, with sales increasing by 14%, said Ludick. He attributed this increase to positive volume growth in the Democratic Republic of Congo, favourable product mixes and a positive performance from the West African gold sector. SPECIALTY CHEMICALS Despite challenges facing the manufacturing sector, Dytor noted that AECI’s specialty chemicals revenue increased by 6% to R9.8-billion, presenting a pleasing performance. He added that profit from operations increased by 12% to R1.12-billion.

BY: MIA BREYTENBACH CREAMER MEDIA WRITER