Cape Lime business to boost Afrimat's earnings

Aggregates and building materials supply company Afrimat, based in Durbanville, Western Cape, South Africa, expects to see higher profit contributions from its Cape Lime business going forward.

Afrimat CEO, Andries Van Heerden, said: "We are hedged against economic volatility through wide diversification. The operational contribution is interesting to breakdown," Mr Van Heerden said. "In financial 2016 the clinker segment accounted for 38 per cent of Afrimat’s business, the Glen Douglas dolomite mines 18 per cent and the traditional aggregates business 32 per cent. But in financial 2017 the traditional aggregates division accounted for 44 per cent of Afrimat’s business, the clinker segment 23 per cent, Glen Douglas 18 per cemt, Infrasors 12 per cent and Cape Lime eight per cent.

"The financial year ahead will be interesting to gauge with Cape Lime set to make a bigger contribution and the newly acquired [Diro] iron ore operations set to chip into profits."

Afrimat generated almost ZAR2.2bn (US$165.7m) in revenue and made more than ZAR405m in operating profit at a rock solid margin of over 18 per cent, reports Cape Business News. The company grew earnings by 25 per cent in 2017, meaning an impressive compound annual growth rate of 26 per cent since 2013. In the financial year ahead, however, Afrimat, will be sorely tested in maintaining its growth record, says the newspaper.

During a presentation at a recent annual general meeting, Mr Van Heerden said the company would pursue a conservative growth strategy while preserving the integrity of the balance sheet.
It does seem that Afrimat will rely on some of its recent acquisitions to drive that profit growth in the short term.

He added that Cape Lime would benefit from marketing efforts, and that the outlook for the Glen Douglas dolomite mine and clinker supplies was stable. He said Africat was keeping its "eyes wide open in South Africa" with credit terms being strictly monitored and an emphasis on diversifying revenue currencies.

Afrimat's strength lies in its operational diversity which now spans open pit mining, industrial minerals, aggregates, iron ore, concrete-based products, bricks and blocks, ready-mix concrete, lime and quartzite.

The company operates 25 commercial quarries, three dolomite mines, four clinker facilities and two limestone mines as well as two silica mines, an iron ore mine and five sand and gravel mines. Afrimat also owns nine concrete brick and block factories and 16 ready-mix batching sites.