AECI’s 61% drop in interim earnings a share all part of a transition to double profit by 2026

AECI, the eThekwini-based international chemicals group, said earnings per share fell 61% to 233 cents in the six months to June 30 and no interim dividend was declared, but it had made strides in its plans to double profitability by 2026, and to be a global leader in its mining business.

Revenue was down 4% to R17.58 billion, and earnings before interest, tax, depreciation and amortisation was down 24% to R1.39bn. Profit from operations fell 36% to R818 million. Headline earnings per share was 57% lower at 260 cents.

CEO Holger Riemensperger said 2024 was a year of transition for the group and milestones were achieved in the first half to position the businesses for better efficiencies, overall performance and profitability in the short to medium term, as well as long-term sustainable growth.

The milestones included a new executive leadership team, a restructure of the organisation in line with a new operating model, a leadership compact, culture code and desired behaviours developed to foster a high-performance culture, and the sale of AECI Animal Health in line with the portfolio optimisation journey, said Riemensperger in a statement.

The R400m earnings before interest, tax, depreciation and amortisation targeted run rate had been achieved, and some R800m of organic mining and chemicals growth projects had been defined.

The mining digital platform had been enhanced for high-performance initiating systems and new electronics technology was being launched. There was also increased investment in maintenance to ensure the prolonged life of the existing asset base.

“Our strategic transition is progressing well. With the focus and investment we have dedicated in the first half of the year, we anticipate continued momentum and substantial value realisation in the second half of the year and the future,” he said in a statement.

He said the performance of the underlying businesses remained strong and the full-year outlook was positive. Market share gains, investments and new contracts were expected to boost AECI Mining and AECI Chemicals in the second half.

“The execution of our strategy is progressing as planned and I am confident that we will deliver on our promises,” he said.

Until December 31, 2023, the operating businesses were structured into four segments: AECI Mining, AECI Water, AECI Agri Health and AECI Chemicals. Reporting segments had since been restructured to AECI Mining, AECI Chemicals, AECI Managed businesses and AECI Property Services and Corporate.

Four statutory plant shutdowns in the six months were used to also catch up on other maintenance.

The group ammonia supply in South Africa improved after the commissioning of 60 rail wagons, resulting from the memorandum of understanding signed for 120 refurbished wagons. To support the long-term sustainability of the operations, alternative supply of ammonia, including green ammonia, was being explored.

The mining business continued to grow globally with new contract extensions in Asia-Pacific where bulk explosives volumes were up 23% and electronics grew by 33%. Growth in Central Africa continued, where robust mining activity was driving growth.

AECI Chemicals’ revenue of R4.36bn was down 4% due to the decline in the South African manufacturing and industrial sectors and over-supply of key products. An increase in profits from operations was attributed to stringent cost management and increased operational efficiencies.

AECI Managed businesses saw revenue fall 2% to R3.73bn and a loss from operations of R3m was reported, an improvement from the R87m loss in the first half of 2023.

Group expansion was planned in Australia, Papua New Guinea, in Latin America and in Brazil, Chile and Peru. The Europe Wolfenbuttel plant in Germany, had been repurposed to produce and sell mining chemicals to the international market.

BUSINESS REPORT