African Oxygen Limited (Afrox) achieved what it describes as ‘pleasing real growth’ for the 15 months ended 31st December 2007, as revenue increased 16% and operating profit rose by a healthy 19%.
Revenue grew to R5.9bn, operating profit rose to R1.1bn and core headline earnings per share (HEPS) reached an impressive 217.5 cents per share, showing a 19% increase.
Afrox invested R1bn during the period as part of a continuing programme to modernise its asset base and in addition to investment in LPG storage facilities, bulk tankers and cylinders, Afrox also commissioned 3 air separation plants and is constructing a new CO2 facility at Sasol in an effort to meet rising demand in the bottling and hospitality markets.
The construction of state-of-the-art facilities at Afrox’s cylinder filling hub in Germiston and its MIG-wire factory in Brits are expected to have a positive impact on relieving product shortages in the coming year.
Managing Director, Tjaart Kruger, said enthusiastically, “All industrial gases experienced good trading conditions, with demand exceeding capacity in areas, resulting in us being active in addressing deficiencies in capacity and service delivery.”
During 2007, the company successfully restructured and implemented a new operating model, in line with its parent company The Linde Group. The company became a part of Linde in 2006 and efforts to both streamline and improve its operating model are bearing fruition.
Kruger explained, “We have changed from a decentralised to a centralised-based organisation. Therefore, we are eliminating all the current duplications that are time-consuming and unnecessary. We are comfortable with The Linde Group shareholding and the governance received from the group, as it gives us a lot of valuable input and, we are getting a lot of mileage out of it.”
Afrox Executive Director and Financial Director Cor van Zyl told Engineering News that the company was also aiming at enhancing its operating profits by 20% from the current operating margins of 18%.
“We believe that our operating margin should be at the 20% mark, and we are currently heading in the right direction. For the past three years, it spiralled into the wrong direction, but we are improving, and are expecting to reach the mark in the next two to three years,” he said.
In 2006, Afrox changed its year-end from September to December in order to align with its holding company, The Linde Group, resulting in the financial reporting period of 15 months.