Afrimat returns to profitability in August 2020 amid Covid19

Afrimat entered the national lockdown with a very strong balance sheet, positioning it strongly for the uncertainty that may lay ahead. The impact of the national lockdown on the Group was dampened by the partial reopening of the Demaneng iron ore mine and certain Industrial Minerals operations early during the lockdown period.

The reopening was undertaken with utmost care to ensure the safety and well-being of all employees. From 20 April 2020, as gazetted by the government, industries in the mining and quarrying sector were granted permission to resume operations.

Afrimat ramped up operations according to market demand and in line with government regulations. All business units recovered from the Covid-19 impact and returned to profitability during August 2020.

All operating units are strategically positioned to deliver outstanding service to the Group’s customers, whilst acting as an efficient hedge against volatile local business conditions. The product range is diversified and consists of Construction Materials including aggregates and concrete-based products, Industrial Minerals including limestone, dolomite and silica and Bulk Commodities, which is made up of iron ore.

The Bulk Commodities segment, consisting of the Demaneng iron ore mine, continued to make an excellent contribution to the Group results, delivering growth of 135,8% in operating profit of R325,8 million, compared to R138,2 million in the prior year.

The mine was allowed to operate at 50,0% of its workforce capacity during April 2020 and 100,0% from May 2020 onwards. The excellent performance was largely due to favourable iron ore pricing during the reporting period.

Industrial Minerals businesses across all regions delivered satisfactorily results. The segment was able to sell limited quantities of product into certain essential services markets during the lockdown. It was, however, affected by the lockdown and experienced a decrease in operating profit of 60,6% from R62,4 million to R24,6 million.

The Construction Materials segment was impacted considerably by the national lockdown which resulted in no revenue for the month of April, as well as limited revenue during May and June 2020.

This resulted in a decrease in operating profit of 97,7% being recorded from R122,2 million to R2,8 million. The segment, however, recovered post the hard lockdown levels and is now back to monthly sales levels similar to those experienced prior to the lockdown.

PROSPECTS

There is limited clarity on the future impact of the Covid-19 pandemic, but the Group has recovered from the initial impact and is poised to deliver a strong performance in the second half of the year.

The Group is, furthermore, well positioned to capitalise on its strategic initiatives and future opportunities.

“The Group’s future growth will continue to be driven by the successful execution of its proven strategy, recent and current acquisitions and a wider product offering to the market. Operational efficiency initiatives aimed at expanding volumes, reducing costs and developing the required skill levels across all employees remain a key focus in all operations,” said AJ van Heerden, Afrimat’s Chief Executive Officer.

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