African Oxygen Limited (Afrox) yesterday reported revenues of more than R2.6bn and operating profit of R450m for the six months ended 30th June 2008, maintaining a confident approach despite tough trading conditions.

Net profit for the period stood at R282m with earnings per share of 89.8 cents. When compared to the same period in 2007 (though the financial year-end has been adjusted in line with parent company, The Linde Group), revenues increased 18% and operating profit by 13%.

Net profit rose 19% and basic earnings per share were up 18% as the company responded well to improving operational performance.

Capital expenditure of R315m saw the company expand its CO2 capacity, increase its cylinder stockpile and launch a major refurbishment programme of existing plant and machinery.

Managing Director Tjaart Kruger reflected, “The organisation has been restructured during the past 12 months, and the new management structures have responded positively to the challenges of improving operational performance and capturing the benefits of the current positive market conditions. We continue to energise the business with the launch of our High Performance Organisation programme.”

The company notes that the reliability of its air separation units reached new highs, which should result in better bulk service delivery and increased product for the merchant market, while the argon situation improved significantly due to good plant performance at Pretoria and Highveld. In addition, Afrox started production at its Wadeville and Pietermaritzburg plants.

Stability from Sasolburg
The outlook is expected to improve in the second half of 2008 and into 2009, as the full benefits of the previously announced capex and restructure programme, are realised, Afrox notes.

Constraints on CO2 production in the second quarter are thought to have stabilised and supply prospects have improved with the commissioning of the new plant in Sasolburg.

According to Kruger the outlook remains bullish, “On the economic front, we anticipate the general slowdown in domestic demand, as a result of local electricity constraints and global pressures, will have only a moderate impact on Afrox and our outlook remains bullish.”