Diversified industrial group enX’s Eqstra Industrial Equipment (EIE) and Eqstra Fleet Management and Logistics (EFML) operations performed satisfactorily in the six months to February 28, enX reported on Monday.
Group revenue for the six-month period ended February 28, increased to R3.6-billion, while earnings before interest and taxes (Ebit) improved to R354.1-million and profit before tax (PBT) improved to R182.7-million. Adjusted Ebit increased to R377.9-million.
Headline earnings for the period increased by 20.9% to R138-million, which translates into headline earnings per share (HEPS) of 77.4c, the company said.
Adjusted headline earnings increased by 33.9% to R156-million, translating into adjusted HEPS of 87.5c.
The group’s capital expenditure increased to R823.2-million, owing to the longer trading period, while being primarily employed to maintain and grow leasing fleets, the company said.
The EIE business continued to report solid orders and increasing market share in South Africa and the UK.
However, enX’s Power business experienced a sharp decline in its order book since August, resulting in reduced revenue and a loss before taxation of R11.3-million for the period.
The business has concluded a restructuring process to re-align its cost base with its revenue projections, and will now focus on the manufacturing of customised generators and importing smaller units below 600 kVA.
EnX’s wood business continued to operate in a subdued market. Notwithstanding margin pressure, the business reported a stable PBT number driven by consistent sales of capital goods, enX said.
Further, the EFML leasing book had stabilised.
Customer retention rates improved alongside growing pipeline of opportunities created by the strengthened sales team.
Value-added products and remarketing revenues showed continued traction, increasing to 55% of revenue contribution with the end of term residual values continuing to be profitable.
enX’s petrochemicals division boasted revenues of R778.4-million, as well as an adjusted Ebit of R36.2-million and adjusted PBT of R26.4-million.
Lubricants, however, experienced a temporary overstock position owing to a large blending customer reducing manufacturing orders to rectify its overstocking situation.
The resulting lower operating profit was somewhat offset by an improved period-on-period performance in the chemicals business.
Chemicals reported strong growth in all product ranges, enX said, with petrochemicals showing a moderately improved performance in the second half of this year.
The lubricants business, the company further added, will start the blending for ExxonMobil and should deliver overall growth in ExxonMobil distribution volumes.
Orders from the existing toll blending customer are expected to improve in the first half of the 2019 financial year, with the chemicals business expected to increase volumes of ExxonMobil chemicals and synthetic rubber.
Looking ahead, enX said it is focused on the “dynamic allocation of capital and is continuously assessing its long-term strategic options.”
Reducing its cost structures throughout the company is an ongoing objective, it added.
“Our 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 company aims to do this by investing in assets and opportunities that drive differentiation, diversity and scale; strengthening its partnerships with leading global brand owners while expanding the business geographically.
These opportunities and assets will also build an entrepreneurial culture, the company said, while maintaining strong financial disciplines and ensuring an ongoing social licence to do business.