CONSTRUCTION: Strong Turnaround For Afrimat
Recent Western Cape Business News
Earlier this year - for the period ending February - the group showed strong financial results (revenue up 13% to R778 million, total dividends of 16 cents per share, compared to 13 cents in the previous period).
CEO Andries van Heerden is satisfied with the group’s performance that bucked the economic downcycle. “Our intention is to protect Afrimat from economic volatility by pre-empting market conditions and proactively implementing measures.” He says Aggregates’ exceptional performance for the year reflects this strategy. “The division’s success is attributable to an early shift in focus away from the collapsed residential market and into infrastructure, and an intentional geographic spread that overcame the negative impact of the weak Western Cape economy.” Major infrastructure contracts were secured in Gauteng, Limpopo and Mpumalanga and the Denver Quarry in the Port Elizabeth area and the KwaZulu-Natal operations performed very well.
He adds that Contracting Services, the group’s mobile crushing operations, gave the division an added boost. All plants that were built as part of last year’s expansion programme are now fully-commissioned to accommodate demand.
Readymix Concrete and Concrete Manufactured Products fared less well, unable to counter the sharp fall in volumes in the Western Cape and industrial action in KwaZulu-Natal that interrupted production. Van Heerden points out that full productivity resumed by mid-August 2009, and he is cautiously optimistic that these divisions’ volumes should improve on the expected revival of the residential and commercial sectors in late 2010.
With an eye on integrated sustainability Afrimat funded its black employees to buy a 16.8% stake in the group during the year. “This takes total black direct shareholding in Afrimat to 26.12% as required by the Mining Charter, but ahead of the 2014 deadline,” says van Heerden.
He is pleased with the group’s recent acquisitions of Blue Platinum and the Glen Douglas dolomite mine. “While both entrench our strengthening presence in Gauteng and further the group’s exposure to the familiar aggregates sector, the Glen Douglas acquisition also exposes Afrimat to the untapped industrial minerals market.” He expects to realise benefits from Glen Douglas in roughly three years once Afrimat’s optimisation strategy has reversed the mine’s current position. “We have numerous examples in the group where cost cutting and optimal efficiencies have been introduced to maximise profitability, and we will follow a similar strategy at Glen Douglas.” He adds that an annual product output of 1.2 tonnes and an established blue-chip client base present a firm foundation on which to build for future growth.
Looking ahead he anticipates good volumes for all divisions, supported by the anticipated recovery in the markets towards the end of 2010 and into 2011. “Government’s ongoing infrastructure commitment, coupled with the group’s strong footprint in this sector, also bodes well for growth.” He says control of overheads will be intensified and new business initiatives will remain a priority. Van Heerden concludes that a team dedicated to new business development with a talent for sussing out high growth markets and regions is a major advantage.
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