Africa-Press – South-Africa. JSE-listed explosives and chemicals group AECI has written down the value of its Schirm business in Germany by R445 million partly due to a slump in demand from farmers in war-torn Ukraine.
Ukraine is the world’s fifth-largest wheat exporter, fourth-largest exporter of corn, and the biggest exporter of sunflower oil, according to statistics from the US government. That makes it an important market for the likes of AECI, which sells chemicals and services to the agricultural, mining, water treatment and industrial sectors.
AECI said on Wednesday that its AECI Schirm unit in Germany had seen a further decline in customer demand in the wake of the pandemic, particularly for crop-protection products in Ukraine.
That business recorded an operating loss of R228 million in the group’s year to end-December, which triggered an impairment of R445 million.
A “comprehensive turnaround project” is under way, although that will result in once-off costs that will impact 2023 earnings, the group said. AECI Schirm is only expected to return to profitability in 20 to 36 months’ time.
Despite headwinds in Europe, AECI reported a 37% increase in 2022 revenues to R35.6 billion.
Headline earnings, which include the impact of the impairments in Germany, rose 15% to R1.4 billion.
“This pleasing performance reflects the significantly improved sales in AECI Mining, AECI Water and AECI Agri Health on the back of increased demand,” the group said.
Revenue in the mining business increased by 51% to R18.1 billion thanks to market share gains, export growth in mining chemicals, and increased chemical commodity prices. Two-thirds of the division’s revenue was generated outside of SA.
In the water business, revenue was 31% higher at R2 billion due to market share gains in public water systems, as well as higher demand from existing customers in the industrial sector.
The agricultural business saw a 17% increase in revenue to R7.1 billion, but reported an operating loss due to the poor performance in Germany.
AECI said it had increased its working capital levels to ensure security of supply in light of global supply chain disruptions and high raw material prices. This pushed net debt up to R5.3 billion.
Mark Dytor, CEO since 2013, recently retired from the group. He will be replaced by Holger Riemensperger, whose most recent role was as chief operating officer at Germany’s K+S Group.
AECI’s shares were up 1.38% to R94.53 in late morning trade on Wednesday, having lost more than 16% over the past year.
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