Thabang Mokopanele
6 November 2009
Johannesburg — CONSTRUCTION materials supplier Afrimat intends to focus on product diversification and enter synergistic industries in order to position itself for the post-infrastructure spend period.
The diversification is also being carried out in preparation for an upturn in the residential property market.
Presenting the group's interim results to August yesterday, CEO Andries van Heerden said that in terms of business expansion the group was looking at greenfield developments, industry consolidation and the continuous improvement of product quality.
He said the group was also focusing on expanding its geographical footprint in Africa.
"The plan is to ready the group for the recovery of the residential property market in the next two to three years. We want to built enough capacity so that when the residential property market recovers we can take advantage of it and benefit," he said.
Van Heerden said the group was working on introducing new materials into the building sector as part of its diversification.
Afrimat's three business units -- aggregates, ready-mix concrete and concrete manufactured products -- posted a 21,2% rise in headline earnings per share to 29,6c for the six months to August. The group saw earnings per share jump 21,8% to 31,3c, while revenue rose 21% to R392,5m from R323,8m. Operating profit climbed 22,1% to R66,6m.
The group declared an interim dividend of 6c.
Van Heerden said the group was focusing on government infrastructure spending in the building of the Medupi Power Station, and was supplying structural concrete and various other aggregates.
Aggregates are construction materials that include sand, gravel, crushed stone, slag, or recycled crushed concrete.
Afrimat was also supplying aggregates for the Kusile Power Station project.
It was working on road contracts for Gauteng freeways, which also involved supplying aggregates.
The company is one of the three largest suppliers in the local aggregates industry.
Van Heerden said the group's geographic expansion programme had gained traction in the past 12 months. Afrimat was supplying concrete blocks and ready-mix concrete to low-cost housing projects in the Free State and KwaZulu-Natal.
Van Heerden said that while the group did experience debt collection obstacles on some new government infrastructure contracts during the half year, since August this had improved and government works remained a key focus for the group.
The group has concluded an empowerment deal, which saw its black employees acquire 15,8% of the company, through funding provided by the group, bringing black shareholding to 26,12%.
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