AECI to pay dividend despite Covid-19 challenges

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AECI to pay dividend despite Covid-19 challenges

Published Date: 2020-07-30 | Source: Stephen Gunnion | Author: Stephen Gunnion

AECI to pay dividend despite Covid-19 challenges

Although its markets remain affected, the chemicals and explosives group says its solid financial position allows it to pay an interim dividend.

AECI says its local operations took a knock in the first half of its financial year due to the Covid-19 lockdown, despite some of them being deemed essential services. Still, while it reported a decline in earnings for the six months to end-June, with restructuring costs contributing to its weaker performance, it plans to pay an interim dividend after managing its cash resources 'very well'.

The chemicals and explosives group said it continued to supply products and services to the coal mining industry during the level 5 restrictions in April as well as water-treatment chemicals, raw materials for the manufacture of personal care and home care products, inputs to the food industry, and agrochemicals and related services for the farming sector. Sales to the mining and infrastructure sectors and the balance of manufacturing-related industries were significantly affected, it said.

Revenue fell 6% to R11.3 billion, with declines in all segments other than Plant & Animal Health. Foreign and export revenue made up 48% of the total and was generated mostly in dollars and euros. Earnings before interest, tax, depreciation and amortisation (EBITDA) dropped 11% to R1.11 billion, benefitting from the R108 million profit it made on the disposal of its paper chemicals business. Profit from operations was down 32% to R558 million. In addition to Covid-19, profit was affected by R64 million in retrenchment costs associated with restructuring of its Food & Beverage and Chemicals segments. It recognised impairments of R69 million. Headline earnings per share came in 34% lower at 240c and it's paying an interim dividend of 100c, down from 156c last year, due to its solid financial position. Its net asset value per share increased by 17% to R105.37.

Excluding any restructuring costs, AECI said profit from operations improved by 20% in the first quarter of the year, with Covid-19 impacting its second-quarter performance.

After deferring its final cash dividend of 414c for its 2019 financial year it said it planned to pay it before the end of the year, subject to the approval of the Companies Tribunal.

Its shares rose 6.4% to R84.07 yesterday.





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