Diversified explosives and chemicals group AECI reported a strong start to its 2023 financial year as operating profit grew by a quarter, lifted by revenue growth and market share gains by its largest segment.
The company, valued at about R9.4bn on the JSE, said in an update for the five months to end-May that its operating profit, generated from a company’s core operations, rose 25% year on year to R1bn, despite agrochemicals company AECI Schirm Germany suffering a loss of R154m.
This comes as the sales of its mining segment, the largest by revenue and operating profit, jumped 35% year on year to R8.4bn and operating profit 45% to R809m after growing its market share in SA, Central Africa, East Africa and Asia Pacific.
“Lower ammonia input prices during the period as well as the weaker rand-dollar exchange rate at the end of the period also contributed to performance,” it said.
The company, which operates in 22 countries, was founded in 1896 to service SA’s gold and diamond mining industries and listed on the JSE in 1966.
Its products and services include chemical raw materials, water treatment solutions, asphalt and bitumen for road construction, and food and beverage ingredients and commodities.
In March, Business Day reported the Schirm business suffered loss as the war in Ukraine hit demand for agrichemicals and pushed up costs. In contrast, sanctions against Russia, which supplies a large chunk of the global supply of ammonium nitrate used as a fertiliser or explosive base, have affected the pricing and availability of raw materials.
“The board approved [a] comprehensive turnaround project for AECI Schirm Germany [that] is ongoing and further updates will be provided when the group announces the interim final results,” the company said.
AECI’s chemical segment, the second largest in terms of sales and operating profit, reported sales in line with the same period last year.
The segment, which focuses in SA, was affected by lower demand from customers hit by load-shedding and the weaker rand pushing up the price of product imports, resulting in operating profit dropping 39% to R151m.
AECI expects to release its interim results on July 26.
With Michelle Gumede
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