JSE-listed concrete and aggregate produce Afrimat on Thursday reported that headline earnings for the six months ended August was down by 31,3% to R32,7-million.

Afrimat CEO Andries van Heerden attributed the decline in headline earnings to the challenging trading conditions, particularly in the Western Cape, as well as the significantly higher cost of diesel, during the period under review.

However, the company reported that its core earnings, which excluded the one-off start up costs of the KwaZulu-Natal operations and black economic-empowerment costs, reflected a lower decrease of 20,1%. Van Heerden noted that the core headline earnings were a more meaningful reflection of the group’s performance.

In the operational review, the company stated that its aggregate operations were impacted by lower volumes in the Western Cape as a result of the extreme and prolonged weather conditions, delays in municipal authorisation of projects, unusually low expenditure on infrastructure budget by the provincial government, and a downturn in residential property development.

The company’s Readymix Concrete unit benefited from higher volumes, resulting from increased government infrastructure development, particularly in KwaZulu-Natal, as well as the additional plants commissioned by Afrimat in the Western Cape region. The government housing projects in KwaZulu-Natal also proved fruitful for Afrimat’s Concrete Manufactured Products.

The interim report noted that government’s commitment to infrastructure and housing development was set to drive the industry growth, and the company stated that it was ideally positioned to derive additional sales volumes from this.

Van Heerden anticipated that earnings in the second half of the year would show a marked improvement. “We should begin to realise returns on investment in organic growth during the period, and continue to benefit from government’s infrastructure commitment reiterated in the medium-term budget.”

He added that going forward, the Western Cape was set to be a growth node, with the region reviving as government released more of its infrastructure budget and municipal works gained momentum.

The company’s new business development would remain a strategic priority for the group. “Afrimat will continue to pursue opportunities in existing markets. In addition, further expansion of the group’s mobile crushing fleet will enable us to take advantage of other infrastructure projects outside our traditional areas of operation, such as the Gauteng Freeway Improvement Project,” said Van Heerden.

To subscribe to Engineering News's print magazine email subscriptions@creamermedia.co.za or buy now.