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Iron ore business lifts Afrimat’s FY earnings
Afrimat’s financial results for the year ended 28 February reveal increases in shareholder return with headline earnings per share up almost 30 per cent to 234 cents, the minerals miner also declared a dividend of 62 cents per share. Afrimat improved its debt to equity ratio by more than 11 per cent. Joining CNBC Africa to unpack these results is Andries van Heerden, CEO of Afrimat.
Fri, 24 May 2019 08:27:59 GMT
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AI Generated Summary
- Afrimat's financial results for the year ended 28 February show a significant increase in shareholder return, with headline earnings per share up almost 30 per cent to 234 cents.
- The company has successfully diversified their business from construction materials to industrial minerals and bulk commodities like iron ore, contributing to a compound average growth rate of 19.3% over the last decade.
- Afrimat's foray into the iron ore market has been a major driver of their recent success, with the iron ore business contributing almost 40% of the company's profits.
- The company is eyeing further expansion through strategic acquisitions, with a potential entry into coal mining to enhance their product offering and market presence.
- Afrimat remains optimistic about the South African business environment, citing positive steps taken by the government and expressing confidence in President Cyril Ramaphosa's efforts to improve economic conditions.
- The company's outlook statement underscores their commitment to executing their proven strategy, recent acquisitions, and wider product offerings to drive future growth and deliver sustained value to stakeholders.
Afrimat, a leading minerals miner, has recently announced their financial results for the year ended 28 February, showcasing an impressive increase in shareholder return. The company's headline earnings per share surged by almost 30 per cent to 234 cents, further demonstrating their robust performance in a challenging economic environment. Moreover, Afrimat declared a dividend of 62 cents per share, solidifying their commitment to delivering value to their shareholders. The company's CEO, Andries van Heerden, joined CNBC Africa to discuss the factors driving Afrimat's success. One of the key highlights of their financial performance was the significant improvement in their debt to equity ratio by more than 11 per cent, underscoring their prudent financial management practices.
Andries van Heerden attributed Afrimat's remarkable performance to a deliberate strategy of diversification that the company embarked on several years ago. By expanding their business beyond pure construction materials into industrial minerals and bulk commodities like iron ore, Afrimat has been able to create a healthy mix of revenue streams. This strategic shift has proven to be instrumental in Afrimat's steady growth over the past decade, with a compound average growth rate of 19.3% in headline earnings per share.
One of the key drivers of Afrimat's success in the recent reporting period was their foray into the iron ore market. The company's iron ore business contributed significantly to their profits, accounting for almost 40% of the total. The surge in iron ore prices, particularly after the mining disasters in Brazil, further bolstered Afrimat's earnings. Looking ahead, Afrimat sees enormous potential for continued growth in their iron ore business, with expectations of strong returns over the cycle.
In addition to their iron ore business, Afrimat is eyeing further expansion through strategic acquisitions. The company has made an indicative non-binding offer for a coal mining business called Universal Coal and is currently undergoing due diligence. If successful, this move will mark Afrimat's entry into the coal mining sector, enhancing their product offering and market presence.
Despite the challenging business climate, Afrimat remains optimistic about their prospects. The company's outlook statement emphasizes their confidence in executing their proven strategy, recent acquisitions, and wider product offerings to drive future growth. Andries van Heerden expressed his belief in the positive steps taken by the South African government to improve the business environment, citing President Cyril Ramaphosa's efforts as a source of optimism. Afrimat's continued investment in South Africa, particularly in coal and iron ore mining, reflects their confidence in the country's economic trajectory.
As Afrimat looks towards the future, they remain cautiously optimistic about the potential returns that lie ahead. While maintaining a conservative approach in their market communications, the company acknowledges the significant upside potential if key factors align favorably. With a strong focus on prudent financial management, strategic diversification, and expansion into new markets, Afrimat is well positioned to capitalize on emerging opportunities and deliver sustained value to their stakeholders.
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