AECI Limited - Voluntary Trading Update for the five month period ended 31 May 2025
PR Newswire
LONDON, United Kingdom, June 30
AECI LIMITED
(Incorporated in the Republic of South Africa)
Registration number: 1924/002590/06
Share code: AFE ISIN: ZAE000000220
Bond company code: AECI
Hybrid code: AFEP ISIN: ZAE000000238
LEI: 3789008641F1D3D90E85
("AECI" or the "Group" or the "Company")
VOLUNTARY TRADING UPDATE FOR THE FIVE MONTH PERIOD ENDED 31 MAY 2025
STRATEGY EXECUTION CONTINUES
AECI continues to execute its strategic plan, with a clear focus on building a high-performance culture with engaged employees, optimising its business portfolio, achieving operational, functional and commercial excellence and expanding its international presence.
In the five months ended 31 May 2025, the following milestones were achieved by the Group:
- progression of the roll-out of the Leadership Compact and Culture Code, which included the completion of a comprehensive culture survey giving invaluable insights into employees' experiences of the AECI culture;
- merging of the AECI Mining's Modderfontein Corporate Office into the Group's Woodmead Corporate Office;
- disposal of the Much Asphalt business for R1.1 billion;
- continued progression of the AECI Schirm Germany restructuring;
- an increase in the cumulative Earnings Before Interest, Taxes, Depreciation and Amortisation ("EBITDA") run rate to R1 billion from the reported R800 million for the year ended 31 December 2024, relating to the Transformation Management Office ("TMO") initiatives; and
- growth of AECI Mining's international operations, underpinned by new contract wins and improved margin performance in the Asia-Pacific region.
The achievement of these key strategic milestones continue to position the Group well in driving operational efficiencies, boosting profitability and laying a solid foundation for sustainable long-term growth.
RESULTS
The Group results for the five-month period ended 31 May 2025 ("the period") were mixed. Overall, AECI Mining's international operations recorded an improved performance compared to the period ended 31 May 2024 ("comparative five-month period"), whilst the South African based operations were impacted by challenging operating conditions and supplier headwinds.
Revenue for the period ended 31 May 2025 was slightly lower than the comparative five-month period. Conversely, both EBITDA and profit from operations were higher than the comparative five-month period due to:
- improved margin performance in AECI Mining's Asia-Pacific region and steady operational performance in Mining Chemicals;
- a reduction in the strategy implementation costs in AECI Property and Corporate Services; and
- continued conversion of the EBITDA run rate relating to the TMO into profit and loss, albeit lower than expectation; partially offset by:
- the impact of the South African based operations, in both AECI Mining and AECI Chemicals, which are facing challenges as further described below.
Extracts of key financial indicators
R million# | YTD31 May 2025 | YTD 31 May 2024* | Change |
Revenue | 13 065 | 13 352 | (2%) |
EBITDA | 1 248 | 1 118 | 12% |
EBITDA margin | 10% | 8% | 2pt^ |
Profit from operations | 800 | 685 | 17% |
Profit from operations margin | 6% | 5% | 1pt^ |
# Continuing operations
* Comparative prior period results have been reclassified in accordance with International Financial Reporting Standards (IFRS 5: Non-current Assets Held for Sale and Discontinued Operations) - Much Asphalt (now disposed of) is classified as a discontinued operation. Results for the comparative five-month prior period have been restated accordingly.
^ pt: percentage points
Net finance costs (from continuing operations) improved by 40% from the comparative five-month period, due to lower debt balances, mainly resulting from the proceeds received for the Much Asphalt divestment concluded in the first quarter of 2025.
The Group's net debt position as at 31 May 2025 was R3 383 million (31 May 2024: R4 740 million), translating to a gearing ratio of 28% (31 May 2024: 38%), well within the Group's guidance range of 20% - 40%. Cash and cash equivalents increased to R2 575 million (31 May 2024: R1 788 million). The Group's net debt to EBITDA, as defined in covenant agreements, improved to 1.1 times (31 May 2024: 1.4 times), remaining well below the covenant maximum threshold of 2.5 times.
OPERATIONAL PERFORMANCE
Safety
In line with the corporate strategy execution, the Group has been unwavering in its efforts to review and reinforce safety best practices. The Group's safety reboot campaign continues to yield positive results on safety indicators. Total Recordable Injury Rate as at 31 May 2025 decreased to 0.21, from 0.32 in the comparative five-month period.
AECI Mining
The Asia-Pacific business unit sales volumes were impacted by inclement weather in the first quarter of 2025, but the business is recovering as customers catch up on the lost volumes. The previously communicated headwinds in the fourth quarter of 2024 associated with sourcing of key raw materials in Australia were addressed after the business successfully entered a new five-year contract for the importation of Ammonium Nitrate. The successful conclusion of this contract positively contributed to improved profitability in the period.
Pleasingly, AECI Mining has successfully been awarded four new contracts in the Democratic Republic of Congo, Australia, Ghana and Botswana, which will continue to drive the international growth agenda.
The South African Mining Explosives business experienced poor power supply at the Modderfontein facility (a national key point) leading to unplanned outages. The business unit also declared force majeure for part of the first quarter of 2025 due to a Lead Azide supply issue which affected the manufacturing of detonators. Both these issues resulted in lost volumes, with the former resulting in third party buy-ins of Ammonium Nitrate to support customer demand. Management is actively engaging with both suppliers to resolve the issues and has also seconded a team of skilled employees to assist in resolving the Lead Azide operational challenges experienced by the supplier.
The Mining Chemicals business, while also being linked to the South African mining industry performance, is performing to expectations, particularly in the metallurgy segment.
AECI Mining will remain focussed on strong fixed cost and capital allocation across the course of 2025.
AECI Chemicals
South Africa's manufacturing sector continued to face challenges affecting pricing and demand. The Industrial Chemicals business was impacted by low demand for Sulphuric Acid and the recognition of an expected credit loss due to a major customer that entered business rescue. The Water business delivered results in line with expectations but faced challenges recovering funds from a supplier that entered business rescue after failing to deliver pre-paid raw materials.
The Plant Health business underperformed slightly due to excessive rainfall affecting pre-harvest sprays, while the Speciality Chemicals business unit was also lagging due to reduced orders from a key customer.
Management is implementing internal initiatives in AECI Chemicals to boost performance in the latter half of the year.
Managed Businesses
The restructuring process at AECI Schirm Germany is progressing well, with strong execution aligned with established milestones. The operations are showing an expected return to a cash breakeven position in the second half of the financial year, largely driven by streamlined cost initiatives. The remaining Managed Businesses are performing to expectation.
The previously announced sale of Animal Health has been terminated via a mutual agreement with the buyer over non-fulfilment of certain conditions precedent. The Group continues to actively engage with other interested parties for the business. Negotiations are at an advanced stage for the potential disposal of two additional managed businesses, not previously disclosed, with deals expected to be concluded in the near term.
CONCLUSION
The Company expects to report an overall improvement in the Group's results for the six months ending 30 June 2025 compared to the performance for the six months ended 30 June 2024, supported by the resilience and solid underlying performance of its core businesses.
AECI anticipates publishing its interim results for the six-month period ending 30 June 2025 on or about 30 July 2025.
PRE-CLOSE CALL
The Group will host a pre-close call today, 30 June 2025, starting at 11h00 (SAST). The details of the call are available on the Company website: https://investor.aeciworld.com/.
DISCLAIMERS
The financial information on which this voluntary trading update is based has not been reviewed or reported on by the Group's external auditors.
This voluntary trading update contains certain forward-looking statements. These statements are based on current estimates and projections of the Executive Team and the Board of Directors of the Company, as well as currently available information.
Forward-looking statements do not guarantee the future developments and results outlined therein. They depend on several factors, involve various risks and uncertainties, and are based on assumptions that may not prove to be accurate.
Woodmead, Sandton
30 June 2025
Equity Sponsor: One Capital
Debt Sponsor: Questco Proprietary Limited
