Afrimat reports group revenue rise of 44% in six months ending 31 August

Afrimat has released results for the six months ending 31 August 2024. Group CEO, Andries van Heerden, said that group revenue increased by 44.3 per cent from ZAR2.8bn (US$158.2m) to ZAR4.1bn, including the recently acquired Lafarge business. Operating profit (excluding a gain on bargain purchase) decreased by 45.2 per cent from ZAR534.1m to ZAR292.7m. Notwithstanding a good performance from the group's quarries and the Industrial Minerals division, the reduction in operating profit was primarily due to losses made in the neglected cement division of Lafarge and drastically reduced iron ore sales because of the unexpected freeze of two furnaces at ArcelorMittal.

Operational review
The Construction Materials segment (excluding cement) delivered a solid performance, increasing operating profit by 39.4 per cent to ZAR217.6m from ZAR156.1m in the previous comparable period. Van Heerden said this is largely due to the successful integration of the Lafarge quarries, fly-ash business and ready-mix batching plants, as well as volume growth and ongoing cost-saving initiatives. 

The cement business incurred losses of ZAR146.2m during the interim period, which he said were primarily due to known reliability issues at the cement factory, resulting in excessive maintenance costs and limited production. Van Heerden notes that given Afrimat’s extensive experience in business turnarounds, a dedicated project management team was assembled under the leadership of Pieter de Wit, Afrimat's CFO, to ensure a swift turnaround.

Moving onto the Industrial Minerals businesses, van Heerden said that this segment achieved a robust performance with an increase of 54.9 per cent in operating profit from ZAR32m to ZAR49.5m. 

Outlook
Van Heerden said that Afrimat is known for being acquisitive in nature. The most recent Lafarge acquisition, made primarily to extract synergies and value from the excellent assets that were acquired, is in the process of being successfully integrated into the group.  

“The aggregates, fly-ash, and ready-mix batching plants have delivered ahead of expectations. Across the construction landscape, the construction materials segment enjoys slightly elevated volumes from road, rail, and dam project demand. In the cement business, there has been an increase in reliability and production volumes. Management considers the turnaround effort a top priority,” he confirmed.