AECI’s share price fell 10.34% yesterday after it reported that subdued performances at its core mining and chemicals divisions, due in part to low prices, and high operating costs, were likely to result in lower earnings in the first half of the group’s 2024 financial year.
The share price closed at R95 on the JSE yesterday, only slightly higher from R90.25 a year ago on the same day.
The group said that AECI Mining and AECI Chemicals were resilient in an environment marked by lower commodity prices, supply chain disruptions, and a slowdown in both the South African economy and the mining industry, the group said in a trading statement.
In addition, once-off events contributed to “unusually high operating costs” and the earnings were expected to be lower relative to the record performance achieved in the first half of 2023.
If the earnings were normalised for the one-off events, earnings before interest and tax were expected to be stable against the prior year.
Earnings per share (EPS) were expected to fall by between 59% and 64% compared to the prior period, to between 246 cents and 215 cents. Headline earnings a share was expected to decline by between 54% and 60% compared to the prior period.
At AECI Mining, high once-off operational costs were incurred for alternate sourcing of ammonium nitrate solution at higher market prices, coupled with expected manufacturing under-recoveries during plant shut-downs.
AECI Property Services and Corporate was expected to report a higher loss from operations of between R400 million – R500m, compared to a loss of R42m in the prior period.
The earnings outlook for the full year 2024 however remained positive, supported by an expected stronger second half performance, less one-off costs, efficiency improvements and value realisation from the strategy execution efforts.
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