Listed South African specialist chemicals and explosives group AECI saw its headline earnings per ordinary share increase by 23% to 194 cents for the six months to June 30, from 158 cents for the first six months of 2004, the company said on Tuesday.
Revenue was up 3% at R3,998-billion from a comparable R3,867-billion, although revenue-weighted volume was marginally lower in aggregate, the company said. Profit from operations rose 24% to R371-million from R300-million at the interim stage last year.
A dividend of 54 cents per share was declared, giving a dividend cover of 3,6 times compared with 44 cents per share and 3,6 times cover in 2004.
AECI said African Explosives achieved a pleasing result, as an excellent performance by operations elsewhere in Africa together with the benefits of last year’s restructuring more than offset some decline in sales to the local gold-mining sector.
Chemical Services posted a solid result despite adverse trading conditions as customers in the mining and manufacturing sectors continued to wrestle with the effects of the strong exchange rate in the first quarter, the group said.
At SANS Fibres, the recovery programme of new product development, conversion efficiency and cost reduction delivered a much-improved performance.
The joint venture operations in North Carolina in the United States traded profitably in the period. In the short term, SANS’s performance will continue to be sensitive to exchange rate movements, AECI said.
It said that a good performance by Dulux in South Africa more than compensated for lower profits from its other African operations.
Looking ahead, AECI said that the progressive benefit of actions taken in prior years in response to a relatively strong exchange rate and low inflation will continue to emerge in the second half-year.
“If the current and somewhat more competitive level of the exchange rate were to be sustained, it would be helpful to the group’s export businesses and also to most of the local customer base.
“Volatility in oil intermediates and hence raw material prices seems likely to continue for some time. Nonetheless, with a similar contribution in prospect from property activities in the second half, management is targeting a significant increase in headline earnings per share for the full 2005 financial year.” — I-Net Bridge