Chemicals group Rolfes on Monday reported a R37-million increase in operating profit to R97-million for the six months to December 31, while its earnings before interest, taxes, depreciation and amortisation also increased by 58% to R103-million.
The strong performance came on the back of its agriculture division, which through effective procurement and resource restructuring, rode through the prolonged drought conditions.
The division saw a 9% increase in revenue to R156-million, with gross profit margins increasing to 33.3%.
However, the division’s operating costs increased to R23-million, owing to an investment in technical resources and capabilities. The operating profit margin improved to 18.7% from 17.4% in December 2015.
Rolfes also reported a 60% increase in its headline earnings to R61-million, with headline earnings a share increasing by 34% to 37.9c.
Cash generated from operating activities also improved by 201% to R14-million from a R14-million deficit in December 2015.
The company’s food division increased its revenue by 146% to R397-million, with gross profit margins up to 17%, largely driven by pricing strategies and volume increases.
Rolfes would continue focusing on expanding the division’s geographical footprint and product ranges locally and into neighbouring countries, including the focused and combined export drive of product into Southern African countries leveraging off the existing group infrastructure to ensure low cost increases.
Meanwhile, Rolfes’s industrial division posted a 15% decrease in revenue to R221-million, which was offset by operating costs decreasing by 30% to R24-million. The division’s operating profit margin also improved to 9.6% from 5.5% in December 2015.
Lastly, the company noted that its water division’s period to date performance was hampered by certain petrochemical tender award deadline extensions.
As such, revenue decreased by 20% to R49-million and gross profit margins decreased to 44.3%, mostly attributable to a once-off tender awarded and completed in the prior years.
However, operating costs also decreased by 23% to R17-million owing to successful restructuring initiatives and management team changes.
Speaking to Engineering News Online, CEO Lizette Lynch said the company was focusing on growing the business in Zambia, where it had opened an office in 2012, through its targeted African expansion strategy. “We are [looking to expand] with our whole product range, leveraging off our current infrastructure,” she said.
Further, Lynch said the company was targeting Tunisia and Egypt to grow its agriculture division. “We are targeting the northern hemisphere market to allow us to counteract the seasonality we experience in the business in the southern hemisphere,” she stated.
The company was pursuing export growth in Brazil through the expansion of its leather business under the industrial division. “This is quite far already, having products tested and getting ready to enter this market,” Lynch noted.
“We are quite positive about the year ahead, [building on our] 30% organic growth year-on-year,” she highlighted.