Sorry. There is a problem server 2. Please try again later. AECI earnings impacted by Covid-19 | Company News

AECI earnings impacted by Covid-19


AECI earnings impacted by Covid-19

Published Date: 2021-02-18 | Source: Stephen Gunnion | Author: Stephen Gunnion

AECI earnings impacted by Covid-19

The chemicals and explosives group says customer activity has not yet returned to pre-pandemic levels.

AECI will report a decline in full-year earnings after Covid-19 impacted its customers and resulted in an impairment of its asphalt business as road infrastructure projects were delayed.

In a trading statement, the chemicals, fertiliser and explosives group said the pandemic had a severe effect on trading in many of the sectors in which its customers operate, resulting in lower revenue and profitability - particularly in the first half of last year. Although trading started to recover in most of the affected sectors after lockdown restrictions were eased, it said a recovery to pre-pandemic levels hadn't been achieved by year-end. It estimated that the negative effect of Covid-19 on earnings and headline earnings per share was about 340c.

AECI Much Asphalt, which operates in the road infrastructure sector, was amongst the most severely impacted by Covid-19 restrictions in the first half of last year. While the government was committed to investment in infrastructure projects, the company said it was uncertain how fast these projects would be executed due to budgetary constraints. As a result, it decided to recognise a R821 million impairment of the R1.53 billion in goodwill that was recognised when it bought the business. This would reduce earnings per share (EPS) by 778c.

For the year to end-December, AECI expects EPS to be between 88% and 93% down from the R12.23 reported in 2019. Headline EPS, which exclude the impairment, would be 20% to 25% lower than the R11.50 previously reported.

Due to its focus on cash management over the year, it improved cash generation to the extent that it was able to reduce its net gearing ratio to between 20% and 25% compared to 36% at the end of 2019.

The company's results are scheduled for release on 24 February.

Similar Stories