Against a backdrop of subdued economic growth during the past two years, which Afrox believes will prevail in the medium term, the company has reviewed its operating model to enable continued growth in earnings, the company said in a trading statement released on Thursday.
Particular areas have been targeted to extract further efficiencies. These are a refined go-to-market approach; the continued centralisation of support functions; the continued integration of production and distribution; and optimised supply and distribution networks.
In the execution of the company’s ongoing restructuring, it will strengthen its operating
model, reduce its fixed-cost base further and allocate resources to areas of future volume growth.
The primary objective of the restructure is to further improve the group’s organisational effectiveness, customer satisfaction and the need for integrated solutions across sub-Saharan Africa, it said.
Accordingly, Afrox expects this will enable it to continue its targeted growth in earnings in the future.
Basic earnings a share for the financial year to end December 31 are expected to be between 139.3c and 161.3c, being between 31.6% and 20.8% lower than the 203.6c reported for the prior corresponding period.
Headline earnings per share (HEPS) for this period are expected to be between 150.5c and 174.3c, which is between 25.1% and 13.3% lower than the 201c reported for the prior corresponding period.
The expected decrease in HEPS is attributed to a 2018 fiscal year restructuring cost of R24-million, a provision made for the restructuring process of R58-million for the 2019 fiscal year, a R55-million impairment of assets as a result of the restructure, and higher costs due to a one-off major plant breakdown.
The company expects to publish its full-year results on or about March 4, 2019.