Insimbi forecasts lower half-year profit in a tough operating environment

Published Apr 18, 2024


INSIMBI Industrial Holdings said yesterday it expected its headline earnings per share to decline between 50% and 60% for the 12 months to end-February 29.

Its results, expected to be released on May 31, were likely to show a similar decline in earnings per share between 11.17 cents and 13.97c compared to 27.94c earnings per share the prior comparable year.

Insimbi provides resource-based supplies to a wide range of industrial consumers such as non-ferrous alloys, refraction and foundry materials, plastic moulding and recycle processes to national, regional and international clients.

Insimbi’s share price fell 1.15% to 86c yesterday close to midday, a price that was 30.6% lower than a year, but which was much in line with the 84c it was trading at three years ago.

“The decrease is due to a particularly challenging economic and operational environment in the second half including port and logistical challenges, lower than expected commodity prices, high interest rates, load shedding and the impact of the ban on exports of recycled metals on the business,” Insimbi’s directors said in a trading statement yesterday.

An “intense focus” on cost savings yielded “notable benefits” in offsetting the impact of these challenges.

“The company remains cash generative and sufficiently capitalised, and therefore has a strong platform to take the company forward in the new financial year,” the directors said.

In its last financial year the group lifted earnings per share and headline earnings per share by 8% and 12% respectively, and it had resumed dividend payments at the interim stage in that year.

According to the integrated annual report, Insimbi was reaping the benefits of recent operational changes to improve efficiency, including steadier revenue flows as recent acquisitions mature.

This had produced more consistent financial performance within reporting periods, in contrast to a traditional first-half seasonal bias. In addition, diversification had created a group with synergies and economies of scale that offset cyclicality in its key commodities.

The group said in its integrated annual report that, going forward into its 2024 financial year, the focus remained on recycling and beneficiating ferrous and non-ferrous metals for supply to local and export clients.

The global focus on decarbonisation and vehicle electrification was supporting a recovery in copper and aluminium prices, boosting revenue and margins. Working capital and cash flow throughout operations were being well managed, and the balance sheet was being degeared.