AECI blames Eskom for under performance

By Sandile Mchunu Time of article published Jul 25, 2019

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JOHANNESBURG - AECI yesterday became the latest listed company to point to Eskom’s rolling blackouts earlier in the year for the under performance that underpinned some of its major divisions in the six months to end June.

Chief executive Mark Dytor said the division’s Senmin’s overall volumes took a knock year-on-year due to a decrease in off-take of bulk liquid xanthate as a consequence of electricity supply constraints.

Dytor said he expected the division to bounce back on lesser interruptions and a conducive international mining environment.

He said while narrow reef underground mining remained under pressure in South Africa platinum group metals, iron ore and coal mining were positive.

“We have seen good results produced by Kumba Iron Ore recently, as the group reported a huge jump in earnings. Remember, mining has come from a very difficult period, which included a strike in Sibanye, but as a group we expect a better second half from the segment,” he said.

Given the improvement in both segments, Dytor said the outlook for the group in the next six months is positive.

“AECI always produces a stronger performance in the second half of the year and we expect this trend to continue in 2019. We are also encouraged by the government infrastructure spend of around R90 billion in the next 10 years and this puts some of our segments in a good position in the long run,” Dytor said.

AECI reported a 14 percent increase in revenue to R11.97bn, benefiting from contributions by its acquisitions of Schirm and Much Asphalt, with the mining solutions segment benefited from higher sales volumes on the continent outside of South Africa as well as the weaker rand/dollar exchange rate.

Profit from operations declined by 9 percent to R826 million, while headline earnings per share (Heps) and earnings per share (Eps) declined by 20 percent to 365cents and 367c, respectively compared to the Heps and Eps of 458c reported last year.

The board declared a gross interim cash dividend of 156c a share, up by 5 percent compared to 149c declared last year.

The group said it would put its faith in the plant and animal health segments for its recovery plans after the drought and low volumes hampered its margins.

Dytor said the section showed signs of improvement as the drought conditions eased in the Western Cape.

“Roll-out of the SupPlant technology, an intelligent farming and automation solution, commenced,” Dytor said.

The plant and animal health segment reported a 16 percent increase in revenue to R2.19bn, largely due to the inclusion of its acquisition of Schirm for the full six-month period instead of five months in 2018.

Dytor said the group decided to retain cash in order to chase acquisitions in the short term.

AECI shares rose 1.08 percent on the JSE yesterday to close at R92.99.


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