Western Cape Business News

Send  Share  RSS  Twitter  26 Jun 2011

CONSTRUCTION: Afrimat Continues To Defy


Recent Western Cape Business News

CAPE TOWN-based building supplies company Afrimat continues to defy the hectic downturn in broader infrastructural development with a solid performance in the year to end February 2011.

Afrimat probably avoided a lot of pain in not (unlike many of its competitors) expanding aggressively via ‘expensive’ acquisition at the top of the market.

But much credit must go to a smart management team (led by Andries van Heerden) for setting up a well diversified, cost efficient and flexible operational structure.

Afrimat’s operations – of which a major slab resides in the Western Cape – comprise aggregates (25 commercial quarries, six sand mines and dolomite mine), eight concrete products facilities and 18 readymix batching sites (more than a dozen situated in the Western Cape).

The aggregates side is Afrimat’s strongest segment with the company now one of the largest suppliers of aggregates in South Africa, producing 7.1m tons for the year.

The bulk of Afrimat’s aggregate production comes from nine plants in the Western Cape – Bredasdorp, Durbanville, Rawsonville, Stanford, Worcester, Grabouw, Paarl, Robertson and Vredenburg.

The company also owns sand mines in Klipheuwel, Melkbos, Macassar and Phillippi.

The aggregates division managed revenue of R582 million in the year to end February with profits coming in at R99 million.

Afrimat CEO Andries van Heerden reports increased volumes on the back of ‘solid contracting activities’. The trading margin was a healthy 17%.

Where Afrimat did take some strain, though, was in the readymix division where frail market conditions (especially in the Western Cape where the company has a large batching presence) knocked the average selling price markedly.

Readymix managed turnover of R167 million, but seriously eroded margins saw profits coming in at just R2.4 million.

Looking ahead (and knowing that brittle trading conditions still persist in the broader construction sector), Afrimat can take some comfort in that the bulk of its revenue is secured through project activity by more than
4 000 customers.

What Afrimat (and indeed CBN) will be watching in the months ahead is the Winelands N1/N2 tender award.

Afrimat indicated that adjudication is behind schedule, but that successful bidders are expected on site next year.

Afrimat, CBN reckons, has a pretty good chance.

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