Argent expects surge in earnings after solid overseas performance

Steel products manufacturer Argent Industrial says it expects earnings to more than double due to its recent restructuring and a strong performance by its international business. 

The company closed down some local manufacturing operations, which had come under pressure because of a weak South African economy, leaving the group to increasingly rely on its UK and US units. 

On Thursday, the group said it expected earnings to improve as much as 125% in the six months ended September 30. Argent said it expected headline earnings per share for the first six months of the financial year to be between 36.9% and 56.9% at 43.13c and 49.43c per share, compared to the 31.49% in the corresponding period in 2017.

The group, which makes and sells a wide range of branded products, including for railways, doors and gates, said its earnings per share were likely to be between 105% and 125% higher at 16.5c and 74.9c per share, compared to the loss of 292.3c in 2017.

In response to the unfavourable local market conditions in the 2018 financial year, Argent underwent a restructuring process that entailed closing or impairing a number of local businesses. 

The group's write-downs amounted to R274.8m. Manufacturing is the biggest activity of the company, which operates factories in SA, the UK and US.

Argent CEO Treve Hendry said in June that the restructuring and expected returns on the group’s overseas operations would hold the group in good stead in the current financial year (2019).

The company will release results for the six months ended September 30 on November 15. The interim financials will show the extent to which the recent imposition of steel and aluminium tariffs by the US on South African foundries has affected the company.

The company’s portfolio includes Argent Industrial Engineering, a manufacturer of steel office and industrial furniture products,  Atomic Office Equipment and Castor & Ladder, a manufacturer and distributor of aluminium access equipment and fibreglass ladders.

Trade and industry minister Rob Davies said on Wednesday that the steel and aluminium tariffs that the US had imposed on South African products would affect local companies.

“We made continuous representations on that issue and so far we have not got any joy out of this. So as this carries on, this will impact increasingly on the performance of global trade,” Davies said on the sidelines of this week’s inaugural roundtable on the country’s black industrialist programme in Pretoria.