Reg Rumney
Chemicals giant AECI’s 40 percent increase in earnings per share to 186 cents for the year ended December is no mean achievement.
As managing director Mike Smith points out, with the first half of 1994 disrupted by public holidays, and the second half made problematic by a long automotive strike, a 40 percent increase in earnings isn’t bad.
The dividend is up 10 cents at 68 cents. Bottom-line profit for the year rose to R287-million from R206-million a year ago.
The results, the company warns, are not strictly comparable. AECI sold 51 percent of its explosives business to ICI, and bought 50 percent of Afex, while merging its chlor-alkali and some of its plastics business into Polifin.
With the exception of explosives and fertiliser most of the businesses in the AECI group started to see a real uptick from the end of the third quarter. Strong sales in PVC piping, destined for housing, and polyethylene, which is used for packaging, as well as urethanes for use in domestic appliances were strong. But across the board, business is good.
Volumes at Soda Ash Botswana, which has been a thorn in AECI’s side because of fierce competition from United States and Central Africa, are better, and market share has improved, but prices are not yet where AECI would like them. AECI put another R44-million into Soda Ash Botswana, out of an extra R48-million investment spending last year.
The lysine plant, part of AECI’s grand plan to diversify out of commodity chemicals, will come on stream around the middle of this year.
Capital expenditure of almost R481-million, R355-million of which was on expansion projects, raised gearing from 39 percent to 43 percent.
There were no major strikes during the year, despite retrenchments. Smith says the retrenchments are not over, as AECI continues to benchmark itself against other international suppliers, though he is not talking about thousands of jobs being lost.
For the year ahead, AECI is reasonably confident. The economic signs are good, says Smith. World chemical prices have moved up, and if the reconstruction and development programme gets going, the company should benefit, probably towards the end of the year.