Chemicals and explosives group AECI says elevated commodity prices helped revenue climb almost a third in its half-year to end-June, but profit growth was more sedate, after the war in Ukraine severely hit demand for agrochemicals there and pushed up costs.
Group revenue rose 31% to a record R15.5bn to end-June, and headline profit 8.2% to R605m, with AECI also deciding not to write down its Schirm business, which has production sites in Germany, despite pressure from the conflict.
AECI, valued at R10.3bn on the JSE, has been cashing in as mining houses ramp up production to take advantage of booming prices. It still achieved a record profit for its half-year, and upped its dividend 8% to 194c — about a R205m payout.
AECI Schirm’s operating loss had more than tripled to R66m, with the war hitting demand for crop protection products, while also pushing up the cost of labour and energy, which has not yet been fully recovered from customers.
This same business, almost 7% of group revenue, fared better in the US, however, and along with a strong growth outlook in that country, management has decided no writedown is required, its results read.
AECI was listed on the JSE in 1966 and its business spans six continents, though it generates about 60% of revenue in Southern Africa.
The diversified explosives and chemicals supplier was registered in 1924 due to the gold boom in SA. AECI’s mining business provides a mine-to-mineral solution to the international mining sector, including commercial explosives, initiating systems, blasting services and surfactants for explosives manufacture, right through the value chain to chemicals for ore beneficiation and tailings treatment.
AECI Mining saw revenue climb 39% to R7.75bn, bolstered by an 83% rise in the price of ammonia, a key ingredient in explosives, but volumes also grew.
AECI Chemicals reported revenue growth of 32% to R3.92bn, although profit margins fell, with the group describing its SA manufacturing performance as “excellent” as it grappled with raw-materials shortages.
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