Afrox shares jump as gases group declares bigger first-half dividend
Difficult conditions at home and in the rest of Africa were offset by a R1bn hospitals contract, and keeping cost increases to just 3%
Gases manufacturer and supplier Afrox has posted double-digit growth in headline earnings per share, despite continued tough conditions in SA and the rest of Africa.
Headline earnings per share (HEPS) rose 11.5% to 98.3c in the six months to end-June, Afrox said on Monday.
It said economic conditions in Africa and in SA continued to constrain its outlook, but it was upbeat thanks to wining a R1bn contract to supply all gases to South African hospitals for the next five years.
The company’s emerging Africa segment was affected by currency fluctuations and subdued economic growth in some countries where it operates.
SA’s economic woes led to a decline in volume in its hard goods business, and marginal volume increases in its industrial packaged gas business.
Gross profit after distribution expenses for operations as a whole improved by 6.7% to R913m, or by 7.5% excluding currency effects.
The group’s focus on cost containment resulted in operating expenses rising just 3% during the period under review.
Overall revenue in the group’s atmospheric gases segment rose 2.7% to R1.16bn, while liquefied petroleum gas revenue grew 10.6% to R1.04bn.
It declared an interim dividend of 52c per share, up 13% from a year ago.
Despite low economic growth in SA, the company said on Monday it would focus on specific growth opportunities, notably its recent healthcare tender award in SA.
The group announced in April it had won a five-year contract to supply 400 public hospitals and 1,600 clinics across SA with gases for the next five years. The group had previously held such a contract 10 years ago.
By 9.40am Afrox’s share price had risen 2.4% to R29.49, having risen 5.32% so far in 2018.