Small-cap metal alloys supplier Insimbi Industrial is hoping for a less volatile second half of its financial year amid the war in Ukraine, high inflation, poor economic growth and interest rate hikes.
“The global focus on decarbonisation and vehicle electrification should support a recovery in copper and aluminium prices, in turn boosting our revenue and margins,” CEO Fred Botha said on Tuesday in announcing interim results to end-August.
Insimbi, valued at R434m on the JSE, supplies alloys to the steel sector, as well as ceramic refractory linings to the cement, paper and pulp, steel and platinum industries.
Its profit jumped more than double in its year to end-February as it benefited from higher commodity prices during the pandemic. But since then prices of copper, aluminium and steel have dropped.
“Along with a 20%-25% collapse in prices for copper, aluminium and steel, this operating environment has had a significant impact on our customers and suppliers alike,” Botha said.
Insimbi’s revenue increased 0.7% year on year to R3.15bn. The bulk was generated from non-ferrous goods with 63.5% and ferrous goods with just over a third.
Net profit jumped by 46.6% to R67.4m and the company declared an interim dividend of 3c per share.
Botha said the effect of the strike at Transnet is unknown, but warned it could worsen bottlenecks in the economy’s supply chain and further hamper crucial imports and exports “with ships already bypassing the Durban port”.
Insimbi is finalising the sale of its plastics business, first announced in May, to streamline its operations. Insimbi Plastics was closed in September and retrenchment packages were paid to staff.
“Negotiations for the sale of the asset and/or its equipment are well under way,” the company said.
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