Afrimat seeks revenue from rest of Africa
Johannesburg - Afrimat, the listed open-pit mining group and industrial minerals and construction materials supplier, is seeking to increase its revenue from outside South Africa from almost zero to 50 percent in the next five to seven years to reduce the country risk in South Africa.
Andries van Heerden, the chief executive of Afrimat, said yesterday that the only foreign earnings the group had at present were from Mozambique, but they were fairly insignificant at this stage and the group wanted to increase these earnings over time.
Van Heerden said it was difficult to specify any target, because it was dependent on opportunity and risk, but would like 50 percent of the company’s revenue to come from outside South Africa in the next about five to seven years.
He said labour was Afrimat’s top risk last year, but they had made a lot of progress with their internal upliftment programmes. But Van Heerden said there were a lot of “forces” that were not aligned to the best interests of businesses.
He said Afrimat’s operations in northern Mozambique were operational and primarily focused on future liquefied natural gas (LNG) projects in the country. Van Heerden said there was some uncertainty over planned LNG projects in Mozambique, because of the low oil price, but Afrimat had received some indications projects would still go ahead.
He said there was a risk in Mozambique, because of the uncertainty over these projects, but Afrimat had entered the country at a relatively low asset cost to ensure its operations were established.
“It’s washing its own face now. It’s not costing us any money and we can now hang back and wait. When it (the projects) happens we will be there,” he said.
Van Heerden said Afrimat would hold back on new opportunities in other African countries while its Mozambique operations were settling in.
He said there were still opportunities in South Africa’s road maintenance and rehabilitation market because 80 percent of the country’s roads were beyond their design life.
He said R33.5 billion was spent on road maintenance this year compared with R10bn in 2006 and capital expenditure on road maintenance was expected to grow to R44.8bn by 2017.
“Probably 50 percent of our total revenue comes in some way from road building, so it’s a big market for us. We see it as a sustainable market… (because of) the shortfall in maintenance and it’s a very good source of employment and economic stimulus for the government,” he said.
The company is also targeting the acid mine drainage and water purification market in South Africa.
Afrimat yesterday reported a 24 percent growth in headline earnings a share to 76cin the six months to August from 61.1c in the previous corresponding period on the back of a strong performance by its mineral producing operations in all regions.
Revenue declined 2.6 percent to R1bn from R1.03bn.
Contribution from operations grew by 26 percent to R160.9 million from R127.3m.
An interim dividend a share of 16c was declared, which was 23 percent higher than the 13c declared in the prior period.
Van Heerden said Afrimat was well positioned to capitalise on its strategic initiatives, which included continued growth from an excellent asset base, selective acquisitions and Greenfield expansion projects.
Shares in Afrimat rose 0.95 percent to close at R26.55 on the JSE yesterday.