Germiston-based foundry Insimbi Industrial Holdings remains cautiously optimistic for the year ahead as its headline earnings a share for the financial year ended February 29, were 25% lower year-on-year at 10c a share.
Earnings a share also decreased, by 32% year-on-year, to 8c a share.
However, during the year under review, the steel and foundry industries in which Insimbi operates continued to struggle in the embattled local and global economies, especially as the international trade-off between the US and China continued throughout the year, with a significant negative impact on trading.
These, together with the push into ferrous metals, saw margins decrease by 1.9% at Insimbi’s Amalgamated Metals Recycling. Aluminium margins were down by 0.5% for much the same reason, the company laments.
Prices on the London Metals Exchange and the rand exchange rate fluctuations further contributed to market uncertainty, the group says.
In spite of the challenging environment, Insimbi’s group revenue increased by 5.9% from R4.5-billion to R4.8-billion, and its gross profit increased by 8.8% to R414-million, from R380-million, owing to improved margins.
Meanwhile, an operating profit of R94-million was achieved, compared with R101-million in the previous year. Operating expenses, however, increased by 24%, of which 16% is attributable to the incorporation of Group Wreck International Non-Ferrous for a full year and 6% to the Treppo Group.
The effective cost control was exercised in the rest of the group, with an increase of only 2% over the prior year.
Further, in terms of acquisitions, Insimbi continued its “cautious but calculated” growth-by-acquisition strategy, following which it acquired the Treppo Group in November 2019. Treppo Group is involved in the metal recycling industry, and this operation “has direct synergies” with Insimbi’s existing metal recycling operations.
However, the roll out of this acquisition took longer than expected and is now expected to only be value-accretive in the financial year ending February 2021.