HILTON TARRANT: Quarrying and aggregates as well as concrete business Afrimat reported full-year results today with revenue and headline earnings per share or profits up by 42% – each of those numbers.
Andries van Heerden is the chief executive of Afrimat. Andries, your mining and aggregates business – an excellent set of numbers from that division.
ANDRIES VAN HEERDEN: Ja, Hilton, thank you very much. We are very pleased. We saw very good performance across the board from the whole mining and aggregates division – and ja, we are happy.
HILTON TARRANT: Of course that business was boosted by the inclusion of Infrasors, which is a business that is listed on the JSE. You bought a chunk of that business a while ago and you’ve added to that stake. You now own 79.6% of Infrasors. The integration and return to profitability going well?
ANDRIES VAN HEERDEN: Yes. Infrasors was included as from March 1 2013 in our numbers, so it’s for a full year. It contributed probably about 10% of our operating profit for the year. And yes, it has turned around and now we need to grow it further and open margin up further.
HILTON TARRANT: Andries, on the concrete side of the business, a little bit softer?
ANDRIES VAN HEERDEN: Yes. The real problem there was one of our concrete product subsidiaries, SA Block, suffered a strike during the second half of last year, which cost us a lot of money in that specific business, and that resulted in slightly softer results from that division.
HILTON TARRANT: You mention that strike there. The labour situation across the business – is that stable?
ANDRIES VAN HEERDEN: It is stable. At this stage we have quite a stable labour force, yes.
HILTON TARRANT: Andries, where are you seeing demand for your products? Is demand strongest up here in Gauteng? Are there regional pockets of demand, is there demand across the country?
ANDRIES VAN HEERDEN: Hilton, for the first time in a long while we actually saw very strong demand for our product generally across the country. It was primarily driven by a lot of material that we sold into the road-building sector, but also the building sector has picked up nicely. So on the aggregate side of our business we saw a strong drive in demand.
And then our industrial minerals business has always been quite a strong business.
HILTON TARRANT: You do mention in today’s’ announcement that you are looking for opportunities outside South Africa. I assume that those will be rather close by?
ANDRIES VAN HEERDEN: Ja, we are constantly on the lookout for good opportunities, and specifically in the neighbouring countries, but also further north. We have people scouting and looking for good opportunities and we are doing a few investigations.
HILTON TARRANT: Thanks to Andries van Heerden. David, what a business! if you look at the share price, the share price is up 25%, give or take, since the beginning of the year. I was joking with Andries before we actually did the interview, and I said “every time you come out with numbers you confound us”. Another 40%.
DAVID SHAPIRO: Because you are reading that against the construction sector, which is has really lagged this year. It’s been patchy. Some companies have come back from writing off a lot, and have recovered. But this has been a very steady grower, and it just shows you – with management and the correct positioning of the company you can still make very good money in bad times. You’ve got to compliment the company. Look, it’s a R2.5bn company today.
HILTON TARRANT: It’s not a sexy business. It’s a quarry business. In other words, they dig up rock, they blast it, they mine rock and then there are crushers – the big crushing plants.
DAVID SHAPIRO: They’ve got Readymix. But these are very, very good numbers and I think this has to be one of the choices in that area. If you feel the compulsion to get into construction or infrastructure development, give it a look, even though it’s only about R2.5bn.
HILTON TARRANT: And in fact this was one of our analyst’s stock picks at the beginning of the year. I’m trying to think of who it was. It was definitely one of his stock picks – even at these levels.
DAVID SHAPIRO: What’s it up on the year?
HILTON TARRANT: 25%.
DAVID SHAPIRO: On the year?
HILTON TARRANT: Past 30 days. That’s not bad.
DAVID SHAPIRO: Does that beat my Sappi?
HILTON TARRANT: Possibly, David, possibly.
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