Afrox’s share price jumps on positive interim results

Gas producer and welding products giant, Afrox, has seen its share price jump almost four per cent following the release of its positive interim results. The company's revenue has increased by 3.9%, amid a challenging economic environment with higher costs. Despite these challenges, Afrox managed to raise profits by double digits, leaving investors optimistic about the future. Matthias Vogt, Afrox's CFO, joined CNBC Africa to discuss the key drivers behind the company's success. Vogt attributed the increase in revenue to a combination of volume and price increases, with a focus on profitable products like bulk industrial gases and healthcare. Additionally, a significant growth in LPG, driven by strategic investments, has contributed to the company's bottom line profits. Efficiency improvements across the organization have also played a crucial role in boosting EBITDA. Vogt highlighted the opportunities in the LPG space, where Afrox has invested heavily to tap into both industrial and consumer markets, leveraging import agreements to drive volume growth above economic projections. The company's success in the LPG segment has been particularly rewarding, as it has unlocked a customer base that spans various industries and daily life activities. However, Afrox's operations are not immune to the challenges facing the mining and manufacturing sectors in South Africa. Uncertainty around policies, such as the mining charter, has impacted the company, especially in products directly tied to the mining industry. Vogt acknowledged the decline in revenues from hard goods, which are more closely linked to mining activities. Despite these challenges, Afrox recently secured a significant healthcare tender expected to generate around one billion rand per year for the next five years. The tender win represents a pivotal moment for the company, as it expands its presence in the healthcare sector and strengthens its position in the market. Vogt emphasized the strategic importance of the healthcare tender, highlighting the growth opportunities it presents amid a difficult operating environment. The tender win will not only boost Afrox's revenue but also improve operational efficiency, as the company works on transitioning customers from competitors' installations to its own. With a timeline of six months for the transition, Afrox is confident in the positive impact the healthcare tender will have on its atmospheric gases business and overall productivity. The long-term outlook for Afrox appears promising, with the healthcare sector expected to drive further growth and revenue for the company in the coming years.