The strategy includes entering into long-term contracts for the supply of oxygen, nitrogen and argon, with particular emphasis on supplying value-added products.
In a presentation to fund managers and analysts last week, chief executive Rick Hogben said the company will focus on creating new markets by launching new products, at the same time becoming predictive and flexible rather than reactive.
“We aim to turn our core com-petences into strategic advantages by growing the scale and scope of Afrox, while improving productivity and efficiency. We will also venture into new products and services for the local and global markets, driving volumes and productivity, and seeking value-adding opportunities,” he said.
“We are anticipating a significant incremental growth through new product development and exports,” said Hogben, adding that about R400-million of sales in 2003 was generated from products which did not exist some years ago. This represents 15% of the total industrial sales. Other strategies include defending its existing markets and also running special products campaigns on a monthly basis.
Hogben further explained that the gas company will also focus on growing its export business through widening its range of products and increasing its share in export markets, with a particular focus on Africa.
In its export drive, the company intends to extend its reach into neigh-bouring countries.
“We see Africa as a growth area for our products, therefore we will increase the size and scale of our presence in Africa, which will include a focus on Tanzania and Angola, as well as the other 15 countries in which we currently operate,” explained Hogben.
Prospective markets include Nigeria, Kenya and Zimbabwe.
The industrial business is all about the management of a number of businesses each worth about R100-million a year. Hogben promised that Afrox would continue to use its ingenuity to reinvent itself as a dedicated industrial business.
As a stand-alone business, he expects Afrox to achieve an average real growth of between 8% and 10% a year above the inflation rate.
In its 2003 results, the company recorded a net profit increase of 42% and increased net cash inflows from operating activities of 34%. This was led by the industrial business, which contributed 62% of the net profit attributable to shareholders.
Last month, the company an-nounced that it would be selling off its healthcare subsidiary, Afrox Healthcare, to a black economic em-powerment (BEE) consortium.
Hogben promised that the company will also attempt to bring BEE into all new enterprises that are pursued, adding that ways to further empower the group are being investigated.
“Afrox has realised the benefits of its investment in healthcare, but a focus on industrials will enable the company to concentrate its energy on maximising industrial market opportunities locally and abroad,” stated Hogben.