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AECI cuts dividend in bumpy year

Feb 23 2010 09:57 Svetlana Doneva

Company Data

A E C I Ltd Ord [JSE : AFE]

Last traded R82.80
Change R-0.40
% Change -0.48%
Cumulative volume 84,587
Market cap R10.62bn

Last Updated: 25/05/2012 at 19:32. Prices are delayed by 15 minutes. Source: McGregor BFA

 

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Johannesburg - AECI [JSE:AFE], a R7.4bn chemicals and explosives business, cut the final dividend more than half to 62c/share amid difficult trading conditions in the year ended December.

Revenue fell a fifth to R10.7bn but the impact on headline share earnings was not as heavy with the group reporting a 16% decline to 146c per share.

The lower dividend also reflected efforts by AECI to control balance sheet stress. Debt to equity gearing, a reflection net debt carried by the company, improved to 53% as of December compared to 75% at the end of June, the group's half-year point.

Net working capital - the monies tied up in creditors, debtors and inventory - as a ratio to sales improved to 15.9% (2008: 19.2%) which reflected better cash management.

The slowdown in the mining and manufacturing sector, a key market for AECI, had been particularly material to the group's bottom line, it said in its results commentary published Tuesday.

Other factors affecting AECI's financial year was a R51m charge relating to restructuring costs and defaults in its property company, Heartland, as well as a R163m bad debt charge relating to a customer operating in the Zambian copperbelt.

Conditions in the mining sector had improved in the second half of the year but the manufacturing and property sectors remained inactive, AECI said. It was looking forward to a tentative improvement in the current financial year.

"The slow turnaround in manufacturing and the continued recovery in the mining sector should assist in improving volumes in 2010," said AECI. "However, a strong local currency could pressurise margins and dampen recovery in volumes."

AECI will aim to start several strategic capital projects in 2010.

Other goals for the year are identifying more sales opportunities outside of South Africa and maintaining working capital ratios in an attempt to preserve cash.

- Fin24.com

 
 
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