JSE-listed African Oxygen (Afrox) expects a “reasonable number” of job losses to occur up to the third quarter of this year, as the company restructures its operations.

“I do not want to say exactly how many jobs will be lost during this restructuring period because this is confidential. But I can say that the number that our business turnaround consultants AlixPartners has identified during the past five weeks and the numbers that we have worked out are very similar.

“There has, so far, only been a net difference of 20 to 40 between [the] figures,” outgoing FD Nicholas Thomson said during a presentation of the company’s results on Monday.

The restructuring came as the company recorded a 62% drop in headline earnings a share to 36.2c for the year ended December 31, compared with 95.3c the year before.

Afrox attributed these results to the lower earnings before interest, taxes, depreciation and amortisation (Ebitda) and a R237-million charge in relation to its restructuring.

The company’s earnings a share decreased by 73% year-on-year to 26.8c, compared with 100.1c in the prior financial year.

Revenue remained flat at R5.8-billion, while Ebitda decreased by 7% to R818-million, owing to lower volumes and inflationary cost increases.

Thomson said market activity had remained depressed, while rising labour, fuel and electricity costs, combined with a weak rand, had negatively impacted on margins and production.

He also highlighted the negative impact of the crippling strikes in the mining and manufacturing sector on its business.

He further pointed out that liquefied petroleum gas (LPG) volumes decreased by 6% year-on-year, but emphasised that Afrox expected to see higher demand in the medium term, owing to the fall in oil prices, which resulted in lower costs for LPG to customers.

Meanwhile, operations in other African countries had contributed 22.7% to gross profit after distribution expenses. This was compared with the operations’ contribution of 20.4% to gross profit in the previous year.

“We continue to aim to increase this figure to 40%,” Thomson said.

Nonetheless, he noted that the slowdown in the commodity and oil markets had resulted in Afrox curtailing its pace of investment into the sub-Saharan Africa region.

“As part of our review of our geographic footprint, Afrox is in the process of exiting from Angola, resulting in an initial R11-million charge against profit,” he pointed out.

In the period under review, Afrox also continued to invest in plant modernisation on which it invested R533-million, which was slightly higher than the R507-million spent in 2013.

Meanwhile, Thomson stressed that the recent resignation of senior executives at Afrox had nothing to do with alleged financial wrongdoings.

Thomson would step down as FD in May to take up the position of CFO and FD at JSE-listed electronics and electrical group Reunert.

Former Afrox MD Brett Kimber had left the group in January, with chairperson Mike Huggon having stepped in as acting MD until a successor was appointed.

“Audit, tax and advisory services firm KPMG have just issued a clean audit of our financial statements and, therefore, no financial irregularities were reported,” Thomson highlighted.

He explained that Kimber had stepped down once the mandate of the MD changed from stabilising the business and positioning it for long-term growth to one that required swift action in terms of restructuring the company.

“My decision was much simpler; it was just came at a very bad and unfortunate time. But it was an opportunity that I felt I had to take, as I will be 56 years old this year and this is probably the last time that I will be able to make a move,” said Thomson.