Lamenting the “mess” of local markets driven by the ruling ANC, small-cap steel products group Argent Industrial says it is ramping up its strategy to focus on offshore growth.
“Domestically, the consequences of the perfect fun show put on by the current elected party has made an absolute mess of the SA markets and is the inspiration to place one’s operations and production elsewhere in the world,” Argent said in a statement on its results for the year ended March 31.
“The strategy is to increase our offshore exposure, which will be achieved by acquisitions, expanding current operations and via exports.”
Argent CEO Treve Hendry is the latest among a string of CEOs who have come out to lambaste the government’s handling of incessant load-shedding and foreign policy choices that some have said would paralyse SA industry.
Hendry told Business Day that “SA under its current leadership is going to be complicated”, citing unstable power and no water supply, dilapidated infrastructure, corruption and risk of being kicked out of the African Growth & Opportunity Act. The programme gives African countries duty-free access to US markets for certain goods, such as textiles.
“However, positive planning and actions will get one ahead of the competition,” he said.
The scathing criticism from the firm comes just weeks after President Cyril Ramaphosa met business leaders — a constituency that supported him when he was swept to electoral victory on promises to revive the economy in 2019 — to allay fears about the country’s energy crisis, logistic constraints and close ties with Russia.
In a bid to stave off the negative influence of the local market, the Umhlanga-based group says it is focusing on growing and expanding its operations outside SA amid demand for its products.
Hendry’s comments came shortly after the company reported a 23% rise in profit to R236m, or 411.3c per share on a headline basis, for the year.
The company, which makes everything from steel furniture to mining equipment, has businesses in SA, the UK and the US. It exports its products to over 35 countries. But it generates the bulk of its current turnover in SA, followed by the UK, the rest of Africa and then Asia and the Middle East.
Argent said one of its UK subsidiaries, Fuel Proof, is expanding its production facility by a third to cater to the demand for larger vessels, fuel farms and transportable hydrogen storage units.
Its fuel storage products have just been launched in the US.
“The current expansion of Fuel Proof started on June 5 and should be complete by January 2024,” the company said.
Fluid Transfer International and Flofuel, which manufacture mobile fuel storage systems for the international aviation industry as well as the maritime and vehicle industries, are set to continue to expand their presence in airports around the world with operational units in 81 countries, it said.
Additionally, Argent said the expansion of Xpanda, its retail manufacturing brand, into the UK is ongoing. Further product additions are planned in the form of Xpanda’s version of the American Shutter product in February 2024.
“The group’s overseas operations have had an incredibly good year and are expected to run at similar levels given their current order book,” Argent said. Subsequently, the group’s overseas stock levels have increased by R113m to R210m due to increased sales volumes and exchange rate fluctuations.
Despite Argent reporting that the SA operational units did well in the year with the group’s brands consolidating their local positions and increasing their export base, Hendry said future acquisitions will be in the global space and preferably in branded manufacturing.
Outlining that it will continue with its share buyback programme, which began in 2019, Argent stated it has so far repurchased and deregistered 1,183,035 shares during the year at an average price of R12.93.
A dividend of 95c was declared, up from 42c in 2022.
Argent’s share price rose 3.13% to R16.49 on Thursday, having grown more than 200% over the past three years.
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