Metals recycling group Insimbi Industrial Holdings has posted a 47% increase in net profit to R67-million for the six months ended August 31, while earnings per share (EPS) grew by 52% to 17.06c.

This compares with a net profit of R46-million and EPS of 11.22c reported for the corresponding six months in the prior year.

The group has declared an interim dividend of 3c apiece, after declaring no dividend in the prior period. 

Insimbi, which comprises a group of companies that sustainably source, process, beneficiate and recycle metals across four business segments, says the first quarter of the new financial year has been most promising, as prices for the company’s key commodities continue to rise from the highs of late last year.

However, trading conditions changed sharply in the second quarter as Russia’s invasion of Ukraine affected economies worldwide, resulting in rising inflation and widespread concerns about a global recession.

Along with a 20% to 25% decline in prices for copper, aluminium and steel, this operating environment has had a significant impact on Insimbi’s customers and suppliers.

The group says the South African economy remains fragile, with the Reserve Bank having revised the forecast gross domestic product growth to 1.9% for 2022, in the wake of higher interest rates and inflation, as well as a depreciating rand.

Despite these global and local obstacles, Insimbi’s target industries and markets continue to develop, its core operations have performed well and demand for its products remains strong, both locally and internationally.

Insimbi believes the conditions affecting its business may be less volatile in the second half of the financial year.

“The global focus on decarbonisation and vehicle electrification should support a recovery in copper and aluminium prices, in turn boosting Insimbi’s revenue and margins.

“In addition, working capital and cash flow throughout the group’s operations have been very well managed and Insimbi is steadily de-gearing its balance sheet,” the company explains in its interim results statement.  

Net cash flow from operating activities reduced from R121-million to R101-million, or by 17% year-on-year, owing to higher inventory levels.

Insimbi says congestion at ports and the shipping environment in general remains challenging.

The risk of external disruptions remains high, but Insimbi believes it has demonstrated its resilience in such times over the past two years. Insimbi is confident that its interim results and rolling 12-month earnings are tangible evidence of Insimbi’s resilience and potential, even under adverse conditions.

The group’s strategic focus remains on recycling and beneficiating ferrous and non-ferrous metals to meet demand for products from local and export clients.