Small-cap metal alloys supplier Insimbi says recent acquisitions mean it is better positioned than before to weather tough trading conditions resulting from the US-China trade war.

The acquisition of scrap metal supplier Group Wreck helped grow interim revenue 13% to R2.4bn to end-August, the group said. The company considered pursuing further acquisitions as a defensive strategy, also citing a lack of progress in government economic stimulus programmes as a challenge to its operating environment.

It acquired scrap metal recycler Group Wreck in November 2018 for R120m, and has another scrap metals trader, Treppo, in its sights.

Headline earnings per share rose 11.3% to 9.42%, with the group saying it had a positive trading and operational outlook for the rest of 2019.

Insimbi supplies alloys to the steel sector, as well as ceramic refractory linings to the cement, paper and pulp, steel and platinum industries.

Commodity and in particular metals prices had been subdued, the group said, estimating that the weighted average “basket” price of its products was 12%-15% lower during the period. This had been slightly offset by a weaker rand during the period under review.

Floods in Durban and industrial action had hampered exports during the period.

Insimbi CEO Fred Botha said the market was still waiting for the economic stimulus and infrastructure upgrades promised by President Cyril Ramaphosa, and expected trading conditions in its second half to remain challenging.

“Against this backdrop a 13% increase in real revenue growth was achieved and in such a difficult environment this is very satisfying and certainly lends support to the acquisitive strategy we have embarked on over the last three years,” said Botha.

The company had said in June it was seeking to acquire metals trader Treppo for an initial price of R109m, though this is subject to approval from competition authorities.

This acquisition was expected to further boost the group's performance it said, and would gel well with existing operations.

“It is expected that trading conditions in the second half of the financial year to 28 February 2020 will remain challenging, however we are confident that the Insimbi group’s foundation is stronger and more resilient and that we are better positioned than we have ever been in our almost 50-year history to weather whatever comes our way,” the statement read.