Petrochemicals, equipment and logistics company enX Group has reported a strong performance for the first half, with earnings doubling.
The group reported headline earnings per share from continuing operations of 61c from 29c a year ago. Revenue was up 5% at R2.1bn.
Heps for total operations was 196c from 70c before.
The group said in a statement on Wednesday that the 2023 period’s earnings were restated due to the classification of enX’s leasing and fleet management business, Eqstra, as a disposal held for sale and a discontinued operation as of August 2023.
The company said the first half results “reflect excellent performances despite the continuing challenging economic conditions.”
The revenue increase was mainly supported by increased volumes of polyethylene and speciality chemicals and components products, together with increased generator sales and related services primarily to large data-centre customers.
While volumes of toll-blending were up considerably, average selling prices were down due to the pass through of lower base oil pricing.
Operating profit from continuing operations before net finance costs, enX’s share of profit from its associate and impairments, increased 63% to R124m, supported by better margins particularly in its lubricants and chemicals operations.
The group's New Way Power operations grew revenue 10% to R333m due to increased generator sales and related services to large data-centre customers.
“In addition, with persistent load-shedding in the first quarter, there was continued demand for generators and parts accompanied by related maintenance services,” it said.
AG Lubricants’ revenue increased marginally to R850m from R844m.
Volumes from toll-blending were considerably higher but average selling prices were down due to the pass through of lower base-oil pricing, the group said.
EnX said the most significant macro risks to the group-wide performance are potential social and financial market volatility given the possible outcomes of the national elections and the impact of higher global interest rates for an extended period of time.
“The consequences, particularly to supply chains, of geopolitical events may affect the group, as well as the general deterioration of SA’s critical infrastructure,” it said.
Conditions within the AG Lubricant and WAG business are expected to remain stable. Together with saturation in the market, levels of growth in New Way Power are dependent on the extent and duration of load-shedding in presenting opportunities.
“While there is a robust order book for the sale of generators to data-centre customers for the next nine months, profits have reduced in months where the frequency of load-shedding is low,” it said.
In April, the Competition Tribunal approved Nedbank Group’s nearly R1bn acquisition of Eqstra Investment from enX.
Eqstra fleet management provides commercial and passenger vehicle leasing services, including fleet management, outsourcing solutions, maintenance and vehicle tracking solutions.
EnX said the deal came about because it believed keeping Eqstra under its wing might restrict the logistics company’s “growth prospects and restrict the returns that can be delivered to enX shareholders”.
Other factors cited for the sale were that the group might struggle to secure the capital for Eqstra to grow aggressively in the market, diversify its asset base and increase its credit risk appetite.
It expects to implement the Eqstra transaction during June.
With Michelle Gumede
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