Afrimat Limited Reports Resilient Performance in 2023 Financial Year

Afrimat Limited reports resilient performance in 2023 financial year
  • Afrimat Limited reports resilient performance in 2023 financial year despite challenging market conditions.
  • Group revenue increases by 4.9% to R4.9 billion; operating profit margin at 19.6%; HEPS at 457.6 cents.
  • Strategic initiatives, including Jenkins iron ore mine and Nkomati anthracite mine, contribute to positive performance despite decreased iron ore prices and economic slowdown.

Afrimat Limited has announced its audited summary consolidated financial statements for the year ended 28 February 2023. Despite facing challenging market conditions, the company demonstrated resilience and delivered satisfactory results supported by its diversification strategy.

The key highlights of Afrimat’s financial performance include a 4.9% increase in group revenue, reaching R4.9 billion. The operating profit margin stood at 19.6%, while headline earnings per share (HEPS) reached 457.6 cents. The net debt-to-equity ratio improved to 4.4%, reflecting the company’s strong financial position. Afrimat also declared a final dividend per share of 110.0 cents.

The Group’s revenue growth was driven by strategic initiatives, including the successful commissioning of the Jenkins iron ore mine and the turnaround of the Nkomati anthracite mine. These developments, along with continuous improvement initiatives at existing operations, contributed positively to Afrimat’s performance.

However, the company also faced challenges such as a decrease in iron ore prices and an economic slowdown, which impacted the Construction Materials and Industrial Minerals businesses. Rising input costs, including diesel, explosives, and electricity, further added to the challenges. To mitigate these factors, Afrimat focused on diversification, cost reductions, increased volumes from newly operational mines, and efficiency improvement initiatives.

Afrimat’s operational units, strategically positioned to provide excellent service and protect against volatile local business conditions, include Construction Materials, Industrial Minerals, Bulk Commodities, and Services. The recent addition of the Future Materials and Metals segment expanded the company’s product offering and national footprint.

The Bulk Commodities segment, comprising the Demaneng and Jenkins iron ore mines and the Nkomati anthracite mine, played a significant role in Afrimat’s operating profit. Despite a decrease in iron ore prices, this segment generated a healthy operating profit margin of 40.3%. The company remains well-positioned to weather the volatility of the iron ore price due to its low-cost production and fixed pricing agreements.

Afrimat’s Industrial Minerals and Construction Materials segments were affected by the economic slowdown and electricity supply interruptions, resulting in decreased operating profits. The recent acquisition of Agri Lime also impacted the Industrial Minerals segment. However, the company’s focus on market and product development, operational efficiency, and skill development remains steadfast.

Looking ahead, Afrimat is confident in its growth prospects and its ability to capitalize on strategic initiatives and future opportunities. The company plans to execute its proven strategy, explore potential acquisitions, and expand its product offering to the market. Afrimat’s commitment to sustainable diversification across its segments will remain a priority.

Despite the challenging operating environment in South Africa, Afrimat remains optimistic about its diversification strategy and its ability to deliver value to shareholders. The company’s financial statements, which have been audited by PricewaterhouseCoopers Inc., reflect its strong financial position and steady growth trajectory.

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