JSE-listed African Oxygen (Afrox) on Thursday reported a 62% drop in headline earnings a share to 36.2c for the year ended December 31, compared with 95.3c the year before, owing to lower earnings before interest, taxes, depreciation and amortisation (Ebitda) and a R237-million charge in relation to its planned 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 had remained flat at R5.8-billion, while Ebitda decreased by 7% to R818-million, owing to lower volumes and inflationary cost increases.

Afrox noted in a results statement that market activity had remained depressed, while rising labour, fuel and electricity costs, combined with a weak rand, had negatively impacted on margins and production.

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

Liquefied petroleum gas (LPG) volumes decreased by 6% year-on-year, but Afrox expected to see increased demand in the medium term, owing to the fall in oil prices, which resulted in a fall in the cost of LPG to customers.

Meanwhile, operations in other African countries had contributed 22.7% to gross profit after distribution expenses.

“The slowdown in the commodity and oil markets has resulted in us curtailing our 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,” the company pointed out.

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

Meanwhile, Afrox also announced on Thursday that its FD Nicholas Thomson had resigned, effective May 31, to pursue opportunities outside the group.

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

OUTLOOK
Afrox would focus on the effective restructuring of the business in the year ahead, noting that benefits of this should start being realised from the fourth quarter of this year.

The group announced in November that it would embark on cost reduction plans to improve its financial position. The company had set out to streamline management, reduce overheads and embark on a review of its geographic footprint, distribution network and business and product portfolios.