Photo by: Duane Daws
JSE-listed Afrox on Friday announced cost reduction plans to improve its financial position following a decline in profit and earnings during the six months ended June 30.
A “challenging trading environment” led to a 4.5% fall in profit to R169-million and a 10.2% decline in headline earnings a share to 49.5c for the six months under review.
Earnings before interest, taxes, depreciation and amortisation (Ebitda) were down 2% at R442-million, with an Ebitda margin of 15.4%, down from 15.7% previously, reflecting the consequence of adverse sales conditions and inflationary pressure on costs.
The prevailing depressed market conditions, which have led to volume erosion, were expected to continue in the medium term, forcing the group to significantly reduce its fixed cost base to ensure an “acceptable level of trading performance” in the future.
The company aimed to streamline management, reduce overheads and embark on a review of its geographic footprint, distribution network and business and product portfolios.
“The company is fully committed to these improvement initiatives; however, it sincerely regrets the material impact on employees that these initiatives are likely to have,” Afrox said, vowing to take all reasonable options to mitigate the impact of these initiatives on its employees.
An update would be provided in January.