AECI, the JSE-listed international chemicals group, delivered strong growth in revenue in the six months to June 30 due to a recovery in volumes and market expansion.
Group CEO Holger Riemensperger, reporting on his first results with the group, said: “I am pleased with the resilience of the business, which has seen it deliver solid results. Performance has been driven by strong volume recovery and market expansion at AECI Mining, as well as AECI Water. Positive growth was also experienced at AECI Agri Health where a robust first quarter performance drove performance.”
Revenue was up 19% to R18.4bn. Earnings before interest tax depreciation and amortisation rose 18% to R1.83bn. Headline earnings a share increased 5% to 603 cents. The cash dividend fell 48% to 100 cents a share.
The results, delivered in a challenging trading environment, reflected the operating business segments of the group delivering good growth overall, although the chemicals business was impacted by the South African macro-environment.
AECI Mining, which comprises Mining Explosives and Mining Chemicals is the largest revenue contributor to the group with revenue of R10bn (R 7.75bn) for the six month period.
A high 69% of AECI Mining’s revenue was generated outside South Africa, from 64% in the same period in 2022. The performance was boosted by volume growth in bulk explosives and initiating systems.
AECI Water benefited from market expansion in the mining industry in central and west Africa. This, with increased sales to existing industrial clients, saw revenue increase by 8% to R1.06bn.
“Looking forward, the increase in sustainability projects (at AECI Water) will bode well for performance,” said Riemensperger
Revenue at AECI Agri Health, comprising AECI Schirm, AECI Plant Health and AECI Animal Health, was up 17% to R3.38bn, although performance was impacted by the R180m loss at AECI Schirm in Germany, and margin pressure due to falling agrochemical commodity prices and delayed pre-season purchases by some farmers.
AECI Chemicals, which is mainly focused on South Africa and comprises AECI Specialty Chemicals, AECI Industrial Chemicals, AECI Food & Beverage, AECI SANS Fibres and AECI Much Asphalt business units, reported a constrained performance due to the decline in certain commodity chemical input prices and overall lower demand. Revenue at R3.94bn was 1% higher.
The group was making progress on improving its balance sheet strength and the turnaround of the AECI Schirm Germany business. With the focus on ensuring the delivery of value across the group, a strategy review is underway. Options on the group’s BBBEE ownership goals were also being considered.
BUSINESS REPORT