AECI Limited Voluntary Update for the nine months ended 30 September 2023
06 Novembre 2023 - 8:00AM
UK Regulatory
TIDM87FZ
AECI LIMITED
(Incorporated in the Republic of South Africa)
(Registration Number 1924/002590/06)
Tax reference number: 9000008608
Share code: AFE ISIN: ZAE000000220
Hybrid code: AFEP ISIN: ZAE000000238
Bond company code: AECI
LEI: 3789008641F1D3D90E85
(AECI or the Company or the Group)
VOLUNTARY UPDATE FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2023
Safety
The Group's Total Recordable Incident Rate (TRIR) at 30 September 2023 was 0.23
compared to 0.15 at 31 December 2022. While we have not yet returned to the
lower levels we reached in 2022, we are pleased to report that, since the first
quarter of the year, no further major events have occurred across all key safety
performance areas. As the Group has entered a period of significant change, our
safety efforts are focussed on proactively mitigating the potential short- and
long-term effects of the change, while we continue with our Zero Harm strategy
journey.
Overview of the Group's performance for the nine months to 30 September 2023
The Group recorded strong results for the nine months to 30 September 2023 (the
current period). Both revenue and EBIT were up on the prior period (30 September
2022) driven by the continued solid growth in AECI Mining. This was as a result
of an increase in mining explosives sales volumes in Southern Africa, Central
Africa and Asia Pacific, the weaker ZAR/USD exchange rate and improved
profitability following the fulfilment of new contracts in Asia Pacific and the
Rest of Africa.
Revenue in AECI Agri Health and AECI Water was up on the prior period driven by
higher selling prices and moderately higher sales volumes. However, the lag in
cost recovery affected margins and is expected to correct in the last quarter of
this year.
AECI Chemicals' performance was down on the prior period due to lower volumes
and pricing, resulting from a general economic downturn in South Africa and
compounded by the significant added strain of loadshedding affecting customer
operations. AECI Much Asphalt continued its recovery with sales and EBIT above
the prior period.
The Group EBITDA and EBIT margins at 10% and 7%, respectively, were in line with
the prior period.
R million Revenue EBIT
30 Sept 23 30 Sept % Change 30 Sept 23 30 Sept 22 % Change
22
AECI Mining 14 896 12 958 15% 1 619 1 248 30%
AECI Water 1 542 1 503 3% 170 173 -2%
AECI Agri Health 3 100 2 961 5% 114 148 -23%
(excl Schirm)
AECI Chemicals 4 167 4 600 -9% 281 342 -18%
(excl Much
Asphalt)
AECI Schirm 2 045 1 579 30% - 201 - 159 -27%
AECI Schirm 1 534 1 188 29% - 230 - 183 -26%
Germany
AECI Schirm USA 511 391 31% 52 48 8%
AECI Much Asphalt 1 894 1 630 16% 83 89 -7%
AECI Group 27 654 25 138 10% 1 895 1 729 10%
Net working capital spend at R7 143 million (30 September 2022: R7 397 million),
was down 3%. Both debtors and inventory reported marginal increases that were
offset by an increase in creditors.
The net finance costs at R425 million were up 92% from R221 million in the prior
period, significantly affecting earnings. This increase was due to:
· Debt related to AECI Schirm, which continues to be loss making;
· Continued higher working capital level, although some improvement was
achieved in the period;
and
· Higher interest rates.
The net gearing ratio of 45% at 30 September 2023 was down from the previously
reported 47% at 30 June 2023 following improved working capital management and
the containment of capital expenditure. Net debt of R5 608 million at 30
September 2023 was marginally down from the R5 741 million reported on 30 June
2023.
The process to refinance the Group's long-term debt initiated during the current
period remains underway. This includes a successful debt capital market auction
concluded in September 2023 and a loan market syndication that will conclude in
November 2023. Both components reference the AECI Sustainability Linked
Financing Framework.
Capital expenditure (capex) investment in the current period totalled R1 017
million (September 2022: R1 064 million) and was down 4% as the Group's normal
maintenance program as well as the growth program linked to recently signed
contracts continued. The organic growth spend related to AECI Schirm USA's
expansion project is now complete and operational. In AECI Mining the capex was
invested in four projects in Asia Pacific, solar farms in Modderfontein and
Sasolburg as well as the Mobile Manufacturing Units replacement programme. The
emulsion plant destined for the Lihir project has been shipped from South Africa
to Papau New Guinea with operations expected in the first half of 2024.
AECI SCHIRM
The segment's revenue was up compared to the prior period following sales volume
growth in both AECI Schirm USA and Germany as well as price improvements in
Germany.
The EBIT loss at AECI Schirm Germany included R 138 million (EUR 6.9 million) in
turnaround project costs which comprised of R86 million (EUR 4.3 million) in
retrenchment costs and R52 million (EUR 2.6 million) in consulting and other
fees.
The Board approved AECI Schirm Germany comprehensive turnaround project is on
track with all milestones achieved. However, the trading environment in the
region has become even more strained and further impacted by high energy costs
and a lack of chemicals demand. This has resulted in a downward outlook and
forecast for this business, with a recovery unlikely in the short term.
AECI MUCH ASPHALT
Revenue was up on the back of higher sales volumes; however EBIT was down
impacted by cost recovery delays. Extensive rains and a taxi strike negatively
affected the performance for the period. The withdrawal of the new preferential
procurement policy by SANRAL is likely to impact the number of tenders awarded
going forward, thereby affecting the performance outlook of this business.
2023 Capital Markets Day
The Group will be hosting a Capital Markets Day today, 6 November 2023 starting
at 08H30 (SAST), where AECI's new strategic priorities and goals for long-term
sustainable growth will be shared. The Group Chief Executive (GCE) Holger
Riemensperger will host the event and will be joined by the Board and members of
the AECI Executive Team. Registrations for participation can be emailed to
zanele.salman@aeciworld.com. The Capital Markets Day presentation is available
on the Company website https://www.ftp.aeciworld-online.com/presentations/cmd
-presentation-2023.pdf.
Critical Skills Visa Application Update
The Company, together with specialist lawyers, is supporting the GCE Holger
Riemensperger with the process of acquiring a critical skills visa, for which he
is eligible. The required SAQA accreditation of his qualifications has recently
been received. The critical skills visa application will be submitted to the
Department of Home Affairs for processing as soon as his professional
registration, another requirement, which is currently underway, has been
completed. A critical skills visa will allow Holger to relocate to South Africa
for work for five years. Until this is granted, Holger will continue to lead the
business from his base in Germany, visiting the country as needed for critical
meetings as is allowed by South African law.
Outlook
In the medium term we see value unlock through the implementation of our new
strategy that will introduce initiatives and programs aimed at driving earnings
growth through a returns focused, streamlined and resilient portfolio.
Shareholders and noteholders are advised that the information contained in this
voluntary announcement has not been audited, reviewed, or reported on by the
Group's external auditor. This update does not constitute a forecast.
Forward-looking statements
This update contains forward-looking statements. These statements are based on
current estimates and projections of the Executive Team, the Board of Directors
and currently available information.
Forward-looking statements are not guarantees of the future developments and
results outlined therein. These are dependent on a number of factors; they
involve various risks and uncertainties; and they are based on assumptions that
may not prove to be accurate.
6 November 2023
Equity and Debt Sponsor
Rand Merchant Bank (A division of FirstRand Bank Limited)
Contact details
Group Investor Relations
zanele.salman@aeciworld.com
Groupcommunications@aeciworld.com
Telephone: +27 (0)11 806 8700
About AECI
AECI is a diversified chemicals solutions company employing 7 168 people at more
than 100 sites. We have a presence in 22 countries on six continents. Founded in
1896 to service South Africa's burgeoning gold and diamond mining industries,
the company was formally established in 1924. AECI was listed on the
Johannesburg Stock Exchange in 1966. A mainstay of the economy in South Africa,
over the years we have expanded our presence and evolved our product and service
offering to a broad base of customers. Our products and services include mine-to
-mineral solutions; water treatment solutions; chemical raw materials and
related services; asphalt and bitumen for road construction; food and beverage
ingredients and commodities; vitamin and mineral animal feed premixes; crop
protection products and plant nutrients; as well as property leasing and the
provision of utilities. Our operating businesses are structured into four key
operating business segments - AECI Mining, AECI Water, AECI Agri Health and AECI
Chemicals.
This information was brought to you by Cision http://news.cision.com
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