AECI H1 HEPS plunge 57%

South Africa's leading chemicals and explosives company AECI recently reported a significant drop in headline earnings per share of 57 percent. Despite this decrease, the company remains hopeful about the future, citing an anticipated recovery in mining activity in South Africa and beyond. In a recent interview on CNBC Africa, Holger Riemensperger, CEO of AECI, discussed the company's strategic restructuring efforts and its plans for the future. Riemensperger mentioned that AECI is currently in the midst of a three-year transformation program aimed at refining its business operations. The company has seen growth in its international business segment and is actively investing in its assets to drive further expansion. As part of the restructuring process, AECI is divesting six non-core businesses to streamline its focus on the mining industry. The CEO highlighted the company's plans to internationalize its operations beyond the African continent, with a presence in Australia, Indonesia, Europe, Latin America, and upcoming ventures in North America. Riemensperger addressed the issue of dividends, explaining that AECI has implemented a new capital allocation framework that ties dividends to free cash flow generation. Due to recent investments in assets and the ongoing transformation program, the company did not declare a dividend in the current period. However, Riemensperger expressed optimism about generating cash in the second half of the year and hinted at a potential dividend declaration by year-end. Looking ahead, AECI aims to focus on its core businesses, particularly mining services, explosives, initiating systems, and mining chemicals. The company is also launching a digital platform in the mining sector to enhance its portfolio offerings. Geographically, AECI's South African business currently contributes around 20 percent of its EBITDA, with the majority coming from the African continent and some from international markets. The company expects its international business to grow further in the future, with a shift towards higher contributions from markets outside Africa. Riemensperger touched upon the positive developments in South Africa's mining industry, mentioning improving infrastructure conditions, such as rail and port systems. These enhancements are expected to facilitate industry recovery and support increased mining activity across various commodities. In terms of specific regions, AECI sees growth potential in Central Africa, particularly the Democratic Republic of the Congo (DRC), and Asia. The company is witnessing strong momentum in copper mining in the DRC and coal operations in Indonesia. Additionally, AECI highlighted upcoming opportunities in Australia and Ghana as key growth engines. Despite the challenges typically associated with operations in the DRC, AECI remains committed to serving its customers effectively and capitalizing on the region's growth prospects.