Afrox reported 30.3 percent decline in earnings before interest and taxes (Ebit) to R596million, down from R855m compared to last year.
However, adjusted for 2018 non-recurring items, which includes the restructuring provision of R52m and the impairment of certain plants of R55m, Ebit declined by 17.8 percent on a comparable basis.
The group said the reduction in Ebit was a result of higher operational cost, additional plant breakdown cost of R56mn, liquified petroleum gas (LPG) stock devaluation, market price impact of R32m and increase in depreciation of R45m.
The share price declined to R23.25 a share after the release of the results but closed the day 3.35percent lower at R24.50 on the JSE yesterday.
However, the group managed to increase its revenue by 6.2percent to R6.05 billion, up from R5.69bn, from a combination of higher volumes in certain sectors of the business and successful recovery of cost inflation as a result of effective pricing management.
“Higher market prices in the LPG segment contributed to that growth and revenue adjusted for changes in LPG market price increased by 2.3percent,” the group said.
The group also reported 9 percent decline in earnings before interest, tax, depreciation and amortisation (Ebitda) to R1.08bn, down from R1.18bn, while headline earnings per share (Heps) decreased by 23 percent to 154.9 cents a share, down from last year's 201c.
The group cut its dividend to 25c a share, down by 53.7 percent compared to last year’s 54c. In the group’s LPG business, revenue increased by 10.5 to R2.55bn, up from R2.31bn.
“Total volumes for the group grew by 0.8 percent to 158 000 tons, up from 156 700 tons. Cylinder volumes increased by 1.7 percent from growth in strategic South African markets mainly as a result of the introduction of an additional 120 000 5kg cylinders for lower-income households,” the group said.
In the atmospheric gases business, revenue increased by 3.5percent, reflecting revenue growth in all business areas and most market sectors of this operating segment.
“This increase in revenue was as a result of effective pricing in line with inflation and growth from healthcare and various Industrial Gas Bulk products and applications. The prevailing challenging economic conditions mainly impacted the compressed gas cylinder business,” the group said.
As part of its atmospheric gases business, Afrox finalised the installations for the additional healthcare business and invested additional R150m during 2018 due to the tender awarded.
Afrox now delivers medical gases and regulators for all nine provinces within the public healthcare sector of South Africa.
Looking ahead, Afrox would focus on specific growth opportunities arising from the healthcare tender award and continue with cost containment and effective price cost recoveries.