Release Date: February 26, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- AECI Ltd (JSE:AFE, Financial) exceeded its transformation target by delivering ZAR 500 million, surpassing the initial commitment of ZAR 400 million.
- The company achieved an EBITDA run rate of ZAR 800 million, indicating strong progress towards its goal of doubling EBITDA.
- AECI Ltd's chemicals division delivered an exceptional performance, driven by strong results in the water and Agri businesses.
- The company maintained a solid EBITDA margin of 13% in its mining division, despite temporary headwinds.
- AECI Ltd has a healthy liquidity position with significant undrawn cash facilities of ZAR 3.1 billion and cash on hand of ZAR 2.4 billion.
Negative Points
- The company reported a 12.7% decrease in EBITDA from continuing operations, primarily due to ZAR 860 million in once-off investment costs.
- AECI Ltd's mining business performed lower than expected, although it was in line with market guidance.
- The effective tax rate increased to 71%, driven by divestment processes and impairment charges.
- The company recorded a loss per share of $2.68, reflecting once-off investment costs and impairments.
- Schirm, one of the businesses AECI Ltd is looking to divest, continues to face challenges due to a difficult external environment.
Q & A Highlights
Q: Can you elaborate on the financial performance and strategic initiatives for 2024?
A: Holger Riemensperger, Group CEO, highlighted that AECI delivered ZAR 500 million in transformation savings, exceeding the initial target of ZAR 400 million. The company also achieved an EBITDA run rate of ZAR 800 million, which is crucial for their goal of doubling EBITDA. The focus for 2024 was on internal value unlock, with plans to further internationalize the mining sector.
Q: What were the key challenges faced by AECI in 2024, and how did they impact the results?
A: Ian Kramer, Executive Vice President, noted that the group faced ZAR 860 million in once-off investment costs, including transformation and divestiture expenses. This led to a 12.7% decrease in EBITDA from continuing operations. The effective tax rate increased to 71% due to these costs, but initiatives are underway to align it closer to the statutory rate.
Q: How did AECI's mining and chemicals divisions perform in 2024?
A: The mining division faced temporary headwinds, including supply chain disruptions, but maintained a solid EBITDA margin of 13%. The chemicals division saw a significant increase in normalized EBITDA, driven by strong performances in the water and Agri businesses, resulting in robust cash generation.
Q: What is the outlook for AECI in 2025, and what are the key focus areas?
A: Holger Riemensperger stated that 2025 will focus on structural cost optimization and preparing for growth. This includes consolidating head offices, unlocking headcount efficiencies, and improving margins. Investments will be ramped up, particularly in mining and international business, with a focus on profitability rather than just revenue growth.
Q: Can you provide more details on the divestiture process and its impact on AECI's financials?
A: Ian Kramer explained that the divestiture process is ongoing, with costs expected to continue into 2025, albeit at a reduced level. The sale of Much Asphalt is anticipated to significantly reduce net debt, and the company remains committed to achieving fair value for all divestments.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
