AECI warns of lower earnings following restructuring
Interim headline earnings to decline after ‘strategic realignment projects’ in its mining explosives business and water unit, ImproChem
Chemicals and explosives group AECI says half-year earnings fell by about a fifth partly because of costly restructuring projects.
Headline earnings per share in the six months to end-June declined by between 18% and 22%, the company said on Tuesday.
This comes after “strategic realignment projects” in its mining explosives business and its water unit, ImproChem.
These projects were completed by the end of June at a total cost of R204m, AECI said on Tuesday.
The explosives unit “reviewed its product and service offering, and the structures that support these, mainly for the South African narrow reef mining market which has been declining over several years”.
The changes will ensure its sustainability, said the group, which is led by Mark Dytor.
“ImproChem realigned its go-to-market model to enhance its capabilities and improve service delivery and efficiencies.”
In the second half of 2019, “the benefits of these projects will offset the costs incurred in the period”, AECI said.
“In future years, the sustainable annualised pretax benefit is expected to be at least R300m.”
AECI said earnings were also dented by a change in its accounting policies.
The group plans to publish its interim results on July 24.