Diversified industrial group enX achieved an increase in adjusted earnings before interest and taxes (Ebit) to R815-million for the financial year ended August 31, compared with an Ebit of R736-million in the prior financial year.
enX has three business segments – enX Industrial Equipment (EIE), Eqstra Fleet Management and Logistics (EFML) and enX Petrochemicals.
Revenue for the year increased to R7.4-billion, from R6.2-billion in the prior financial year, with the inclusion of EIE and EFML for 12 months, compared with ten months in the previous year.
Adjusted headline earnings increased to R337-million and translated into adjusted headline earnings a share of 188.5c. Earnings have been impacted on by general sluggish economic market conditions, especially in the power industry.
Aligned to the company’s growth strategy, capital expenditure increased to R1.78-billion, from R1.39-billion in the prior year, primarily to re-invest in leasing fleets.
Leasing assets increased to R5.38-billion, from R5.08-billion in the prior year.
Meanwhile, the year under review produced satisfactory results for EIE. By all metrics, the performance was noted as better than the previous year, with margins continuing on an acceptable trajectory.
Both the South Africa and UK businesses performed well, as a result of the provision of quality solutions, products and entrenched partnerships.
The power business experienced difficult trading conditions in the first half of the year but managed to turn its performance around in the second half of the financial year.
The wood business experienced a small improvement in revenue; however, owing to this growth being driven more by lower-margin equipment sales rather than higher-margin consumables and services, profitability was down.
The business introduced a rental solution to clients, and this has been well received.
The group’s long-term goal is to build a growing, cash generative industrial business which over time consistently delivers returns on equity in excess of its cost of capital.
The group's aim is to continue to grow its investment in the EIE and petrochemicals businesses.
On a constant currency basis, EIE is expected to deliver annualised earnings growth driven by the UK operations. The Southern African forklift operations are expected to deliver solid performances.
The lubricant business received approval from ExxonMobil, allowing it to locally blend certain products, which is expected to make the group more competitive.
Supportive conditions in the polymers and rubber markets are expected to drive higher volumes and profitability.
Macroeconomic conditions remained subdued. While recognising this, enX believes that its business model and current portfolio of businesses have defensive characteristics given the annuity generating nature of its products and assets, strong market positions, brand partnerships and long-term client commitment.
However, the company announced earlier this month that it was considering selling the EFML business, following a strategic review that determined the business would be “better suited” under a different structure.