AECI
LIMITED
Incorporated
in the Republic of South
Africa
(Registration
number: 1924/002590/06)
Share
code: AFE ISIN:
ZAE000000220
Hybrid
code: AFEP ISIN: ZAE000000238
Bond
company code: AECI
LEI:
3789008641F1D3D90E85
(AECI or
the Company or the Group)
TRADING
STATEMENT FOR THE YEAR ENDED 31 DECEMBER
2024
AECI is in
the process of finalising its financial results for the year ended
31 December 2024 (the period), which
results are expected to be released on the Stock Exchange News
Service of the JSE Limited (SENS) on or about 26 February 2025.
2024,
a year of strategy execution and transition for
AECI
2024 has
been a pivotal year for AECI as we continue executing our
transformation strategy to reposition the Group for sustainable
value creation. Following the strategic roadmap outlined in
November 2023, we have made
significant progress in optimising our portfolio, enhancing
operational efficiencies, and delivering on key shareholder
expectations.
While the
expected financial results reflect a year of transition, our
performance, excluding non-recurring impacts, is aligned with our
long-term strategy. The anticipated results reflect the impact of
strategic divestments, transformation investments, and one-off
impairments, all of which position the Group for stronger future
performance.
The Group
is expected to deliver stable operational performance with AECI
Chemicals expected to report earnings before interest, taxation,
depreciation and amortisation (EBITDA) improvement of ~25%, driven
by stringent cost controls and increased efficiencies notably in
AECI Agri Health and AECI Water. AECI Mining is expected to report
~13% lower EBITDA – as previously reported, earnings, particularly
in the first half of 2024, were impacted by R204 million once off
costs which included alternate sourcing of ammonium nitrate
solution during planned plant shutdowns. Pleasingly, the AECI
Mining EBITDA performance in the fourth quarter of 2024 improved in
comparison to the two preceding quarters as well as the comparative
fourth quarter of 2023 due to a strong performance improvement in
Central Africa and Australia-Asia. This positive performance is expected to
continue into the new financial year. The execution of strategy
projects are already positively contributing towards core business
operational performance.
Reclassification
of AECI Much Asphalt to discontinued operations
As
communicated on 4 November 2024, AECI
had entered into a Share Purchase Agreement with,
inter
alios,
Old Mutual
Private Equity, to dispose of 100% of its shareholding in Much
Asphalt (Proprietary) Limited (AECI Much Asphalt), for an estimated
final consideration of R1 100 million
(subject to any final adjustments on the locked-box structure). The
sale is progressing as expected, with all regulatory approvals now
obtained. The remaining condition precedent (finalisation of the
locked-box exercise) is expected to be met in the first half of
2025.
As a
result, in accordance with IFRS 5 (Non-current Assets Held for Sale
and Discontinued Operations), AECI Much Asphalt has been classified
as a discontinued operation, and prior year figures have been
restated accordingly.
Earnings
Guidance
In
accordance with paragraph 3.4(b)(i) of the JSE Limited Listings
Requirements, Shareholders are advised that AECI is satisfied that
a reasonable degree of certainty exists that the financial results
for the period to be reported upon will differ by at least 20% from
the financial results for the year ended 31
December 2023 (previous corresponding
period).
AECI
expects to report:
-
a
basic loss per share from continuing and discontinued
operations of between
241 cents and 295 cents compared to
basic earnings per share from continuing and
discontinued operations of
1 112
cents for the previous corresponding period;
-
basic earnings per share from continuing
operations of between
237 cents and 289 cents compared to
basic earnings
per share from continuing operations
of
1 043
cents (restated) for the previous corresponding
period, being a decrease of between 77% and 72%; and
-
basic loss per share from discontinued
operations of between
524 cents and 537 cents compared to
basic earnings
per share from discontinued operations
of
69 cents (restated) for the
previous corresponding
period.
The
decrease in basic earnings for the period compared to the previous
corresponding period is primarily due to the following key factors
in the underlying business:
Continuing
operations
-
R860
million (R701 million net of tax, or 664
cents per share) in non-recurring costs, including the
following:
-
R467
million in transformation project costs;
-
R186
million in divesture costs;
-
R204
million of investment spend on statutory shutdowns; and
-
R56
million (2023: R159 million)
of AECI Schirm Germany turnaround spend; partially offset by
insurance recoveries of R53 million
(2023: R184 million);
and
-
the
anticipated recognition of non-cash impairments of R377 million
(R340 million net of tax, or 322
cents per share), mainly relating to AECI Schirm
Germany and AECI Mining.
Discontinued
operations
-
R732
million net of tax (or 694 cents per
share) of non-cash impairments relating to the fair value loss on
the sale of AECI Much Asphalt.
While
non-cash impairments negatively impact reported earnings, they are
reflecting the strategic repositioning of the Company to create
long-term shareholder value.
The
decrease in basic earnings is partially offset by the
Transformation Management Office’s delivery of ~R400 million (~R292
million net of tax, or 276 cents per
share) EBITDA contribution.
Other
The
Company is expecting an elevated effective tax rate from continuing
operations of ~71%, driven by non-deductible expenses, non-cash
impairments from continuing operations (as disclosed above), and
foreign withholding taxes.
Headline
earnings
The Group
expects to report headline earnings per share (HEPS) of between
662 cents and 770 cents compared to HEPS of
1 137
cents for the previous corresponding period, being a
decrease of between 42% and 32% after adjusting for:
-
the
anticipated recognition of non-cash impairments from continuing
operations of R377 million (R340 million net of tax, or
322 cents per share);
-
R732
million net of tax (or 694 cents per
share) of non-cash impairments relating to the fair value loss on
discontinued operations; partly offset by
-
a R44
million (R34 million net of tax, or 32
cents per share) surplus on the disposal of investment
property, plant and equipment from continuing
operations.
Looking
ahead, the
Group remains focused on:
-
Executing
its transformation strategy to unlock further operational
efficiencies;
-
Investing
in core business areas that drive sustainable earnings
growth;
-
Finalising
divestments and optimising the balance sheet to enhance capital
allocation; and
-
Reinvesting
in asset health to mitigate future business disruption
risks.
As
previously communicated, 2025 will reflect continued implementation
of these strategic changes, with a focus on portfolio optimisation,
operational efficiencies, and reinvestment in core business areas
to drive sustainable earnings growth.
The
financial information contained in this announcement and on which
this trading statement is based has not been reviewed, reported on
or audited by the Company’s external auditor.
Woodmead,
Sandton
20 February 2025
Equity
Sponsor: One Capital
Debt
Sponsor: Questco Corporate Advisors
About
AECI
AECI is a
diversified chemicals solutions company employing 7 000 people at
more than 100 sites. We have a presence in 22 countries on six
continents. Founded in 1896 to service South Africa's burgeoning gold and diamond
mining industries, the Company was formally established in 1924.
AECI was listed on the securities exchange operated by the JSE
Limited in 1966. A mainstay of the economy in South Africa, over the years we have expanded
our presence and evolved our product and service offering to a
broad base of customers. Our core products and services include
mine-to-mineral solutions; water treatment solutions; chemical raw
materials and related services; crop protection products and plant
nutrients; as well as property leasing and the provision of
utilities. Our operating businesses are structured into four
operating business segments – AECI Mining, AECI Chemicals, AECI
Corporate and Property Services and AECI Managed
Businesses.
Contact
for enquiries:
AECI
investor relations
AECIInvestorRelations@aeciworld.com