JSE-listed African Oxygen (Afrox) reported yet another year of strong results, with revenue for the 12 months to December 31 up 6% to R5.69-billion. Headline earnings per share rose by 32.3% year-on-year to 201c and basic earnings per share by 30.7% to 203.6c.

However, owing to a 2016 litigation settlement with steelmaker ArcelorMittal South Africa, Afrox had to adjust its revenue, which then only increased by 2.8% year-on-year to R5.53-billion for the year – still a strong growth trajectory, despite the continued weakness of the local economy.

At a presentation of the company’s results in Johannesburg, Afrox CEO Schalk Venter said the company was pleased with the volume and revenue growth.

The company further declared a 31.6% increase in its 2017 dividend to 100c apiece, after adjusting for the nonrecurring R165-million settlement, which mainly affected its atmospheric gas division.

The company’s benchmark return on capital employed (Roce) reduced by 90 basis points to 23.7%, adjusting for the impact of the settlement. However, had it been a normal year, Roce would have improved by 370 basis points, compared with 2016, which, the company noted, reflected its continued balance sheet optimisation.

Afrox CFO Matthias Vogt explained that the company’s Swift programme, which had been implemented in 2015 as a turnaround strategy, but later implemented as a broad-based management strategy, added about R156-million in gross savings for the year.

“Despite inflation, despite other cost increases, we further reduced our operating expenses in 2017. It is extremely important for a company to maintain its productivity,” he said.

Speaking to Engineering News, Venter, meanwhile, said he shared in the renewed optimism in the country, as it was difficult to ascertain a proper stance on policy prior to President Cyril Ramaphosa’s election. “Was it really business friendly?” he questioned.

“How will this new leader eliminate some of these ills that don’t bode well for investors? The mining industry, owing to the mineral wealth in South Africa, could play a substantial role in growing the economy – so, hopefully, better policymaking, clearer structures and more investor-friendly rhetoric will come from government,” he pointed out.

Venter added that the company would continue to look north of South Africa’s borders for continued growth, particularly in its role as a gas supplier in Zimbabwe.

“The regional economic developments are highly favourable,” he said, highlighting that, with calls for investment and a resurrection of the agriculture sector in the neighbouring country, it would lead to higher consumption of Afrox’s products.

“We are well positioned to participate in market growth,” said Venter.