JOHANNESBURG - Afrimat's share price has been quietly ticking up - no wonder, if you read the trading statement released last week. 

In the depressed economic environment we are currently experiencing it is almost a miracle for a true SA Inc company to grow its earnings at such a pace. It expects earnings per share for the full year to February to increase between 20 and 30percent.

In the past three years the share price was pretty much going nowhere, just like the rest of our market. Investors were disappointed with the interim results for the six months to August 2018; at the time, the share price dropped to R22.

It has, however, recovered since then, gaining 35percent to trade at the all-time high reached in 2017, just over R30 per share. The last set of results showed that the weak economic conditions took their toll, and the aggregates side of the business declined.

The contribution of the construction materials division is declining; in 2017 it contributed 76percent of operations, and in 2018 it decreased to only 56percent.

Industrial minerals contributed 20percent, and the new bulk commodities division is already at 25percent. Revenue was driven by the success of their new iron ore mine, producing a high-quality product. The 25percent it contributed to operating profit came only at the end of the previous financial period, when the mine came into full production.

Afrimat is a consistent performer and stalwart. It is probably one of the best-performing shares on the JSE over the long term. If you bought the share five years ago, your return would be 20percent on average per annum. Over a 10-year period the average annual share price increase was around 35percent a year. Afrimat has shown in the past that it has what it takes; it is a leading black-empowered company providing industrial minerals and construction materials.

Afrimat operates through five key divisions, namely Aggregates, Industrial Minerals, Commodities, Contracting International, and Concrete Based Products. The company supplies a broad range of construction materials and industrial minerals, ranging from mining and aggregates, metallurgical dolomites, agricultural lime and concrete products (bricks, blocks and pavers) to ready-mix.

Further, Afrimat has established a strong foothold in contracting services, comprising drilling and blasting, mobile crushing and screening. The group’s growing geographical footprint covers vast sections of urban and rural Southern Africa, supported by the fleet of mobile crushers, which offers flexibility beyond fixed areas of operation.

As a result, the group’s integrated product offering is today distributed across the Western Cape, Eastern Cape, KwaZulu-Natal, Free State, Gauteng, Limpopo, Mpumalanga and Northern Cape. Afrimat services projects of any scale, from major infrastructure and construction projects for state-owned enterprises and parastatals to small private sector contracts. Afrimat is due to publish its results on May 23. It will be interesting to see how the improved earnings are made up, given the force majeure declared in December 2018 by their railway service provider.

It was due to an accident that took place on the Sishen-Saldanha line on November 28, 2018. As a result, the railway service provider declared a force majeure for 10 days in respect of its contract with Afrimat, resulting in Afrimat not being able to export its full iron ore production for the month of December. Despite this, the iron ore division was probably the main reason for the recovery of earnings.

Amelia Morgenrood is a PSG Wealth financial adviser based in Pretoria. Views are of the author and not necessarily the general view of the entire PSG entity. Afrimat shares are held on behalf of clients.