Unloved quarrying group Infrasors (IRA) looks as though it might become a reliable profit block in Afrimat’s (AFT’s) building supplies portfolio.

Afrimat holds 91.6% of Infrasors (if treasury shares are included)‚ having grabbed a 50.7% stake in March last year for R33.1m.

In Afrimat’s annual report‚ released last week‚ CEO Andries van Heerden said Infrasors’s turnaround strategy of reduced costs and improved revenue was showing positive results.

In the year to the end of February‚ Infrasors increased revenue by 14% to R327m but managed just R184‚000 in pretax profits.

“We recognise there is some way yet to go to capitalise on the full potential of Infrasors’s mines‚” said Mr van Heerden.

He said the incorporation of Infrasors into Afrimat was progressing well.

“The Lyttelton (dolomite) and Marble Hall (limestone) operations are performing well‚ while the Delf Sand operation is being impacted by the high cost of transporting raw materials from Delf Cullinan due to its mineral resources being depleted.”

Marble Hall could achieve profitability in the short term‚ and Delf Sand should return to profitability in the next year‚ he said.

Infrasors battled to generate positive market sentiment after listing in 2007‚ but investors began showing interest when Afrimat became involved. The share price has more than doubled since early last year‚ to current levels near 110c.

With Infrasors’s prospects more solid‚ Afrimat has signalled its intention to buy out remaining minority shareholders.

Directors were pleased with a resurgence in Afrimat’s traditional aggregates market‚ Mr van Heerden said.

“Demand for aggregates is escalating and helping to drive improved volumes in our mining and aggregates segment.”

With all processing plants fully operational‚ Afrimat was well placed to continue meeting increased demand‚ Mr van Heerden said. Afrimat’s flexible delivery — revolving around its mobile plant operations — meant it could take advantage of opportunities across Africa‚ notwithstanding the location of its fixed quarries and mines.

In the past financial year the mining and aggregates segment delivered 86% of group profits‚ contributing R195m. Mr van Heerden said key growth drivers would come from the continued development of the industrial minerals market‚ continued South African National Roads Agency Limited roadworks‚ and unlocking government infrastructure spend for service delivery.

Afrimat shares were unchanged at R15.15 on the JSE on Tuesday‚ but they have increased 75% in the past 12 months.

Posted on : 30 Nov,-0001