AECI
LIMITED
Incorporated
in the Republic of South
Africa
(Registration
number: 1924/002590/06)
Share
code: AFE ISIN:
ZAE000000220
Hybrid
code: AFEP ISIN: ZAE000000238
Bond
company code: AECI
LEI:
3789008641F1D3D90E85
(AECI or
the Company or the Group)
TRADING
STATEMENT FOR THE SIX-MONTH PERIOD ENDED 30
JUNE 2024 AND VOLUNTARY ANNOUNCEMENT RELATING TO THE SALE OF
THE ANIMAL HEALTH BUSINESS
The AECI
Group is currently finalising its financial results for the
six-month period ended 30 June 2024
(the period), which results are expected to be released on the
Stock Exchange News Service of the JSE Limited (JSE) on or about
31 July 2024. In accordance with
paragraph 3.4(b) (i) of the JSE Listings Requirements, shareholders
and noteholders are advised that AECI is satisfied that a
reasonable degree of certainty exists that the financial results
for the period to be reported upon will differ by at least 20% from
the reported financial results for the previous corresponding
period ended 30 June 2023 (the prior
period).
2024
is a year of transition for AECI
In the
past six months, the Group has been focused on executing our
strategy and safely completing the two statutory shutdowns deferred
from the previous year in the mining business. These priorities
drive sustainable growth, improved efficiencies and profitability
in the long-term and came with upfront investment cost. Given the
focus and foundation set in the first half of the year, we expect
these efforts will start to gain momentum and realise value in the
second half of the year and into next year.
Group’s
earnings guidance for the period
The
underlying performance of both AECI Mining and AECI Chemicals, for
the period, demonstrated resilience in an environment marked by
declining commodity prices, supply chain disruptions, and a
slowdown in both the South African macroeconomic environment and
the mining industry.
One-off
events, contributed to unusually high operating costs and
consequently, the Group’s earnings for the period are expected to
be lower relative to the record performance achieved in the first
half of 2023.
If the
Group earnings are normalised for the one-off events, the earnings
before interest and tax are expected to be stable against prior
year with margins holding.
Therefore,
shareholders and noteholders are, advised that, the earnings
results for the period are expected to be between the following
ranges:
-
Earnings
per share (EPS) for the period are expected to decrease by between
59% and 64% compared to the prior period, resulting in EPS between
246 cents and 215 cents. The reported EPS for the prior period
was 600 cents per share. Included in
the period’s EPS are the following:
-
At
AECI
Mining, high one
off operational costs were incurred during the period for alternate
sourcing of ammonium nitrate solution at higher market prices
coupled with expected manufacturing under-recoveries during plant
shutdowns. These costs will not repeat in the second half of the
year and will not be incurred in 2025 as no statutory shutdowns are
expected for at least the next three years.
-
AECI
Property Services and Corporate is
expected to report a higher loss from operations of between R400
million – R500 million, compared to a reported loss of R42 million
in the prior period. The increase is attributable to the following
once off costs associated with the execution of the corporate
strategy
-
Group
operating model restructure
-
M&A
consultancy, mainly comprising deal adviser fees
-
AECI
Schirm Germany turnaround
-
Transformation
Office (internal strategy execution function) costs, mainly
comprising of consulting fees
These one
off costs will ease off in second half of the year.
-
Higher
non-deductible expenses and foreign withholding taxes from improved
dividends received from foreign subsidiaries have resulted in an
elevated effective tax rate for the Group of between 50% -
60%.
-
Slightly
elevated net finance costs are expected due to once off interest
levied by Revenue Authority on transfer pricing
assessment.
-
Headline
earnings per share (HEPS) are expected to decrease by between 54%
and 60% compared to the prior period, resulting in HEPS between
276 cents and 241 cents. The reported HEPS for the prior period
was 603 cents.
Earnings
outlook for the full year 2024 remains
positive supported by an expected stronger second half performance,
reduction in one-off costs, continued efficiency improvements and
value realisation from the strategy execution efforts.
Voluntary
announcement relating to the sale of the Animal Health
business
On
09 July 2024 the Group signed a Sale
and Purchase Agreement for the sale of its Animal Health business,
as a going concern, to Nutreco International B.V (“Nutreco”) (South
African subsidiary is Trouw Nutrition South Africa Proprietary
Limited). Nutreco is recognised worldwide for its commitment to
excellence and innovation, making it the right home for the Animal
Health business and our people. The transaction is subject to
customary closing conditions, including regulatory approvals and
the satisfaction of other agreed-upon terms. We anticipate the
transaction to close in four to six months. This transaction
affords us the opportunity to concentrate our efforts and resources
to achieve our ambition to double profitability of the core
business (Mining and Chemicals) by 2026 and attain a global market
position in Mining of number 3 by 2030.
The
financial information on which this trading statement is based has
not been reviewed, reported on or audited by the Company’s external
auditor.
The
Group’s financial results are expected to be announced on SENS on
or about Wednesday, 31 July
2024.
Woodmead,
Sandton
24 July 2024
Equity and
Debt Sponsor: Rand Merchant Bank (A
division of FirstRand Bank Limited)
About
AECI
AECI is a
diversified chemicals solutions company employing 7 189 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 core
products and services include mine-to-mineral solutions; water
treatment solutions; chemical raw materials and related services;
crop protection products and plant nutrients; as well as property
leasing and the provision of utilities. Our operating businesses
are structured into three operating business segments – AECI
Mining, AECI Chemicals and AECI Managed Businesses.
Contact
for enquiries:
AECI
investor relations
AECIInvestorRelations@aeciworld.com