Explosives and speciality chemicals group AECI reported its highest recorded headline earnings per share (HEPS) to date, at 959c, for the financial year ended December 31. The HEPS was up 17% year-on-year, while earnings per share increased by 22% year-on-year to 900c.

The company attributed the increases to a strong performance in the fourth quarter of the year, which boosted AECI’s full-year profit by 18% to R15.7-billion. Earnings before interest, taxes, depreciation and amortisation also increased by 11% to R2.17-billion.

“The ongoing recovery in the global resources sector, the benefits of the group’s diversification strategy and disciplined cost control contributed to the results,” the company said in a statement.

The group declared a final gross cash dividend of 340c per ordinary share, an increase of 13% from 2016, bringing the total dividend for the 2017 financial year to 478c, 10% higher than the prior year.

In the water and process segment, revenue of R1.45-billion was 3.2% higher year-on-year and profit from operations grew by 14.5% to R182-million. Growth in South Africa, which is ImproChem’s commercial base, was curtailed by poor conditions in the manufacturing sector and the effect of the drought in the Western Cape.

There was a pleasing improvement in business in the rest of Africa, with 30% of ImproChem’s revenue now generated on the rest of the continent.

In plant and animal health, revenue was flat at R2.54-billion and profit from operations declined by 22.9% to R133-million, also as a result of the drought in the Western Cape and the stronger rand.

Meanwhile, the company’s food and beverage division recorded a 6.5% increase in revenue to R1.19-billion.

In chemicals, revenue was flat at R3.56-billion and profit from operations of R365-million declined by 7.2%. This decrease was attributable mainly to the consequences of the closure of Huntsman Tioxide at the end of 2016, with a negative R25-million impact on contribution, and the stronger rand.

Overall volumes increased by 1% and the operating margins remained robust at 10.2%. The segment remained highly cash generative.

Looking ahead, AECI CEO Mark Dytor said this year would be a year of integration. “The focus will be on bringing Much Asphalt and Schirm into the group and ensuring that they deliver. Together, these acquisitions represent an investment of more than R4-billion.”

While the acquisition of Much Asphalt was pending approval from South Africa’s competition authorities, the acquisition of Schirm became effective on January 30. Currently, the business was being integrated and the initial accounting was in progress.

Owing to its strong agrochemicals offering, it would operate in the plant and animal health segment as a standalone entity.

Meanwhile, the commissioning of Senmin’s R90-million expanded xanthate manufacturing facility in Sasolburg and ImproChem’s installation of four desalination plants in the Western Cape would also come into play this year.

The number of desalination plants is expected to grow as the water crisis deepens.

Following successful trials in the US and Canada, Nulandis is also awaiting regulatory approvals for the expansion of its Biocult offering, which represents a significant opportunity for the business to grow internationally.

“In addition, the management of cash and control of costs will continue to be monitored very closely. Similarly, the innovation initiative will keep identifying opportunities for new markets and products that have the potential to accelerate growth in the future.

“An example of this from 2017 is the group’s $5-million investment in Origin Materials, a privately owned company in the US with new technology in renewable chemicals,” said Dytor.

He highlighted that the recent changes in South Africa’s political environment have created more positive sentiment.

“There is no doubt that business and investor confidence is already improving. Better gross domestic product growth will follow, while issues such as the rand’s rate of exchange and weather patterns are less predictable.”