[TOP STORY] Afrimat results prove it’s much more than an iron-ore company

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[LISTEN] We try to find assets with a really good underlying competitive advantage, then keep things simple, do the right things right and get efficiency. So far it’s worked well: Afrimat's Andries van Heerden on MoneywebNOW. Download the podcast

SIMON BROWN: I’m chatting now with Andries van Heerden, CEO of Afrimat. Results to year-end February: revenue up 26.7%, operating profit margin 23.7%, headline earnings 22.9% higher, dividend of R1.46. Here’s a fun fact. The full-year dividend is R1.86, and you could have bought the share for less in the 2008 crisis.

ANDRIES VAN HEERDEN: Yeah. We have an agreement with our customer to buy – during the first year of operation, they bought 50 000 tonnes a month from us, and contractually we should now ramp up 100 000 tonnes a month. As soon as that kicks in, this business should do even better. SIMON BROWN: In a sense, when you say keeping it simple, these are open-cast. I’m probably wrong, because I’m not the engineer here, but you started life in a quarry and this is kind of taking quarrying to a slightly different angle, where you’ve now got bulk commodities and the like [that] you’re pulling out of the ground, rather than just aggregate.

So we prefer to build our own skills and only bring in consultants in very specific roles, where it’s more cost efficient to bring in a hired-in skill than to have our own skill. SIMON BROWN: Mentioning water, the rains in April weren’t in this period under review, but you’ve got some KZN [sites]. My understanding is not that much. Was there much impact from that rain on you or perhaps maybe on your customers downstream?

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