Afrimat Faces Major Losses as Iron Ore and Anthracite Struggles Weigh on Earnings

Afrimat, the diversified mining group, is facing significant financial challenges, reporting a staggering 45% drop in operating profit for the six months leading up to the end of August 2024. In a trading statement released today, Afrimat warned of a potential 85-90% decline in its earnings per share for the full financial year, which ends in February 2025. This marks a sharp contrast to the 520.3c earnings per share recorded for the year to February 2024.

A Struggling Iron Ore Market

Afrimat’s challenges began with the ongoing struggles in the iron ore market. The company reported a decline in revenue from iron ore exports, exacerbated by the unfavorable rand exchange rate. Additionally, volume reductions from major client ArcelorMittal South Africa in the first half of the year put further strain on Afrimat’s performance.

Impact of Cement and Anthracite Losses

Cement losses were another blow to Afrimat’s earnings. The company’s acquisition of Lafarge cement was expected to bolster its portfolio, but the integration has yet to lead to profitability. CEO Andries van Heerden had previously expressed confidence in a speedy return to profitability. However, performance remained weaker than expected during the first half.

In addition to cement challenges, Afrimat also faced underperformance from Nkomati Anthracite. The company’s anthracite operations were hit hard by the closure of the Mozambique border, which restricted access to the Maputo port and delayed critical exports. As a result, Nkomati Anthracite was unable to export any products during the second half of the financial year.

A Path to Recovery

Despite these setbacks, Afrimat’s management remains optimistic about the future. In their trading statement, they emphasized the resourcefulness of the team in navigating these challenges and laid out a plan for recovery. The company aims to strengthen its foundation for long-term sustainability and anticipates a better financial result for the 2026 financial year.

Afrimat is confident that its diversified portfolio, with key initiatives in Nkomati Anthracite and Lafarge’s construction materials business, will provide a more balanced revenue stream in the future.

The next few months will be crucial for Afrimat as the company works to overcome these financial hurdles and regain stability. Investors and analysts will be closely watching the company’s ability to return to profitability and its efforts to improve its operational efficiency.

{Source: miningm}

Follow Joburg ETC on Facebook, Twitter , TikTok and Instagram

For more News in Johannesburg, visit joburgetc.com