Afrimat has reported a 58.5% decrease in its operating profit from R1 152.4 million to R477.7 million for the year ending 28^th February 2025, resulting in an overall profit margin of 5.7%.

The Group reported an increase in revenue 36.7% from R6.1 billion to R8.3 billion including the Lafarge business with cash generated from operations equating to R571.6 million compared to R1 551.4 million, impacted by lower profits and working capital requirements.

Group CEO Andries Van Heerden says that Afrimat was affected by a declining iron ore price, a strengthening Rand, and ongoing limitations on the export rail line.

“Additionally, there were no anthracite product exports from Nkomati through Mozambique due to border closures, and the cement business faced losses. Furthermore, additional debt to fund the acquisition of Lafarge resulted in significant additional finance costs. This culminated in headline earnings per share reducing from 567.3 cents to 72.3 cents.”

In its interim results, a gain on a bargain purchase of R262.7 million was reported in relation to the Lafarge acquisition, based on the preliminary fair values of the identifiable assets. However, in line with IFRS 3, and as part of the final purchase price allocation within the permitted measurement period, Afrimat reassessed the fair values of the identifiable net assets required which led to a downward adjustment to the value of certain assets, based on updated information that existed at the acquisition date. As a result, the previously recognised bargain purchase gain was derecognised, and no gain on bargain purchase is reflected in the final results.

The Group’s net debt to equity position increased to 48.9% (February 2024: 1.4%) due to funding towards Lafarge and Glenover transactions.

The aggregate component of its construction materials segment delivered a solid performance, increasing operating profit by 40.2% to R383.5 million from R273.4 million in the previous year, delivering an operating profit margin of 10.8% (FY2025: 12.4%). Van Heerden says this was mainly due to the successful integration of the Lafarge quarries, the fly ash business, its readymix batching plants, as well as volume growth.

Its cement business incurred losses of R285. 4 million. “During the first half of the financial year, the operation contended with known reliability issues at the cement factory, resulting in excessive maintenance costs and limited production. Following the revitalisation of the plant, production is at acceptable, efficient, and dependable levels, but during the second half of the year, the business had to contend with unusually high rainfall, which impacted production in January and February 2025.”