Insimbi’s full-year earnings to fall as much as 60%
A tough operational environment, lower commodity prices, high interest rates and load-shedding affected earnings
17 April 2024 - 07:48
byJacqueline Mackenzie
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Small-cap metal alloys supplier Insimbi Industrial Holdings expects to report a 50%-60% drop in earnings for the year to end-February due partly to a challenging economic and operational environment in the second half of the financial year.
Headline earnings per share (HEPS) were expected to be between 11.02c and 13.78c from 27.56c a year ago, it said in a statement on Wednesday.
Apart from port and logistical challenges, the company also cited the effects of lower-than-expected commodity prices, high interest rates, protracted periods of load-shedding and the ban on exports of recycled metals.
The intense focus on cost savings yielded notable benefits in offsetting the impact of these challenges, it said.
The company remained cash generative and sufficiently capitalised, so had a strong platform to take it forward in the new financial year, it added.
Insimbi, valued at R328m on the JSE, supplies alloys to the steel sector, as well as ceramic refractory linings to the cement, paper and pulp, steel and platinum industries.
In October, the company reported lower profits and a 95% fall in cash generated for the six months to end-August as it grappled with the effects of the ban on exports of recycled metals. The ban forced it to increase its working capital cycle to 42 days from 38 days to remain competitive in the local market after the ban.
The ban, considered an urgent and necessary means to reduce prices and discourage syndicates from looting infrastructure, was imposed in November 2022 as the state battled to tackle metal infrastructure theft that costs the broader economy about R187bn a year. The government extended it by another six months in June 2023.
As a result, exporters like Insimbi have been forced to supply more material to the local market, where it offers payment terms to remain competitive, as opposed to the export markets where the payment terms were upfront or on shipping.
Insimbi operates in four business segments — nonferrous, ferrous, refractory and plastics — and supplies alloys to the steel sector, as well as ceramic refractory linings to the cement, paper and pulp, steel and platinum industries.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Insimbi’s full-year earnings to fall as much as 60%
A tough operational environment, lower commodity prices, high interest rates and load-shedding affected earnings
Small-cap metal alloys supplier Insimbi Industrial Holdings expects to report a 50%-60% drop in earnings for the year to end-February due partly to a challenging economic and operational environment in the second half of the financial year.
Headline earnings per share (HEPS) were expected to be between 11.02c and 13.78c from 27.56c a year ago, it said in a statement on Wednesday.
Apart from port and logistical challenges, the company also cited the effects of lower-than-expected commodity prices, high interest rates, protracted periods of load-shedding and the ban on exports of recycled metals.
The intense focus on cost savings yielded notable benefits in offsetting the impact of these challenges, it said.
The company remained cash generative and sufficiently capitalised, so had a strong platform to take it forward in the new financial year, it added.
Insimbi, valued at R328m on the JSE, supplies alloys to the steel sector, as well as ceramic refractory linings to the cement, paper and pulp, steel and platinum industries.
In October, the company reported lower profits and a 95% fall in cash generated for the six months to end-August as it grappled with the effects of the ban on exports of recycled metals. The ban forced it to increase its working capital cycle to 42 days from 38 days to remain competitive in the local market after the ban.
The ban, considered an urgent and necessary means to reduce prices and discourage syndicates from looting infrastructure, was imposed in November 2022 as the state battled to tackle metal infrastructure theft that costs the broader economy about R187bn a year. The government extended it by another six months in June 2023.
As a result, exporters like Insimbi have been forced to supply more material to the local market, where it offers payment terms to remain competitive, as opposed to the export markets where the payment terms were upfront or on shipping.
Insimbi operates in four business segments — nonferrous, ferrous, refractory and plastics — and supplies alloys to the steel sector, as well as ceramic refractory linings to the cement, paper and pulp, steel and platinum industries.
With Michelle Gumede
mackenziej@arena.africa
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