Afrox earnings almost halves

Johannesburg - Gases and welding products supplier African Oxygen [JSE:AFX] on Thursday reported headline earnings per share of 74.6 cents for the year ended 31 December 2009, from 133.5 cents earlier.

An earnings per share was down 44% to 75.2 cents per share.

Afrox declared a final cash dividend of 19 cents per share, from 25 cents previously.

The group said revenue deceased by 15% to R4.8bn. Net profit was R243m.

An operating profit of R537m was achieved, from R753m previously.

Cash generated as a percentage of Ebitda was 147% compared to 66% for 2008. Cash generated from operations increased by R568m to R1.23m Afrox ended the year with net borrowings of R914m. "This reporting period was characterised by diminished returns and extreme pressure on sales, volumes and margins.

"Actions taken in response included the consolidation in filling sites, elimination of slow-moving and minimally profitable product ranges, optimisation of routes to market and the introduction of a minimum delivery order value which has enabled distribution to schedule more economically and improve service levels, Afrox said.

Afrox MD, Tjaart Kruger said: "Further measures were the reduction of electricity consumption, procurement pricing initiatives and a 4% improvement in productivity. Head-count was also reduced by more than 700, which was 17% of the workforce. Together these have reduced the cost base of the business in excess of an annualised R200m. These savings are sustainable with further gains expected in 2010.

"Trading conditions in 2009 were extremely tough and necessitated that we adopt, reform and implement processes and structures that enable and encourage the delivery of exceptional performance."

Looking ahead, the group said that focal points for 2010 remained working capital management, reducing overheads, minimising the cost and complexity of doing business, and preserving liquidity. There is every indication that any recovery will be off a low base and slow.

"While African Operations turned in solid performance towards the end of year, we are acutely aware of increased competitor activity, economic variances and pressures in local geographic markets, which may indicate certain volatility in returns as we progress through 2010," it said.

- I-Net Bridge