Afrox seeks strategic partnership to fortify Joburg hub
DURBAN – African Oxygen (Afrox) is planning a strategic partnership before the end of the year with an international partner to strengthen its manufacturing hub in Johannesburg.
Afrox managing director Schalk Venter said on Friday: “The international partner has the know-how, and this will help us to access higher brand products. The partnership will also help us to sell higher brand products, and we expect the partnership to be finalised by the end of the year.”
In the six months to the end of June, the JSE-listed gas and welding technologies group reported a 10.2 percent decline in revenue to R2.69 billion, or 7.5 percent when adjusted for changes in liquefied petroleum gas (LPG) market prices, from lower volumes across all segments related to the Covid-19 lockdown.
However, the group said this was mitigated by a stable healthcare business and the successful recovery of cost inflation, particularly in the atmospheric gases and hard goods segments.
Its earnings before interest and taxation fell 26.5 percent to R336 million, mainly due to lower volumes related to the lockdown restrictions and increased sourcing costs for LPG resulting from the shutdown of local refineries.
Venter said this could partially be mitigated by further efficiencies from restructuring activities and strong focus on cost-containment initiatives.
Headline earnings per share declined 31.3 percent to 76.5 cents a share, and basic earnings per share fell 30.5 percent to 77.8c.
Afrox increased its capital expenditure by 37.78 percent to R248m as a result of investments in cylinders for LPG and its healthcare business.
It declared a cash dividend of 38c, which was 30.9 percent lower compared with 55c last year.
Venter said that, given the impact of the lockdown and reduced economic activity, Afrox would continue to focus on optimising revenue opportunities, effective price cost recoveries, fixed cost containment, cash preservation and liquidity. “The group’s cash balance of R1.17bn places Afrox in a strong position to take advantage of future opportunities,” he said.
Afrox shares closed 5.38 percent higher at R17.36 on the JSE on Friday.