Afrox Ebitda to drop, restructuring expected to improve margin in future

29th January 2015

By: Tracy Hancock

Creamer Media Contributing Editor

  

Font size: - +

Afrox expects its earnings before interest, taxes, depreciation and amortisation (Ebitda) before any restructuring costs for the year ended December 31 to be between R792-million and R836-million, 5% to 10% less than the previous year’s R880-million.

This decrease, Afrox explained on Thursday, was owing to the ongoing impact of inflation and reduced volumes.

In November the company announced that it would embark on a “significant” restructure to achieve a step-change in profitability against a backdrop of soft demand for its products resulting from the prevailing economic conditions and intense competition.

The primary objective of the restructure was to address the group’s fixed cost base to significantly improve its Ebitda margin in the medium term.

Afrox believed that these conditions were likely to continue into the medium term and that the restructure was a necessary step to ensure the sustainability of the company in the longer term.  

The group’s consolidated revenue for the year under review was expected to be in line with the revenue earned in the previous financial year of R5.82-million, while earnings a share were expected to be between 68% and 78% lower than that of the prior year, at between 22c and 32c apiece.

Headline earnings per share (HEPS) were expected to decline by up to 67%, at between 31.5c and 40.9c apiece, after taking into account the provision made and impairment costs related to the restructure.

“The main contributor to the reduction in headline earnings is a R165-million provision for restructuring costs together with a R20-million write-down of inventory owing to the restructuring.

“Added back in the calculation of HEPS is a R52-million impairment of assets, resulting from the planned restructuring,” Afrox outlined.

The company said in a trading update that it planned to engage a leading global business advisory firm with “significant” international experience in corporate restructuring and performance transformation to ensure that the restructuring process was brought to a successful conclusion by the end of 2015.  

Afrox would release its full year results on February 26.

Edited by Tracy Hancock
Creamer Media Contributing Editor

Comments

The content you are trying to access is only available to subscribers.

If you are already a subscriber, you can Login Here.

If you are not a subscriber, you can subscribe now, by selecting one of the below options.

For more information or assistance, please contact us at subscriptions@creamermedia.co.za.

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION