Afrimat (AFT) – Investor day and HEPS update

The Afrimat investor open day provided clarity on the existing businesses and an update on the operations c. 4 months into FY25. We did not receive much more guidance on Lafarge but we did get clarity on the current performance of its operations and potential growth opportunities in FY26.

Glenover and the Industrial Minerals segment are not expected to shoot the lights out in FY25. The optimism around the FMM segment has faded as the market for its phosphates product disappeared and Afrimat is in search of a new market and customers. With the commissioning of the new SSP plant, the segment may be able to make a good contribution to topline and potentially turn a small profit.

There is a lot of positivity around the Construction Materials segment, especially with the integration of Lafarge. The business should be easy to turn around and cost savings have already been achieved. Management is expecting a strong performance from aggregates due to the large number of Sanral projects, but the rest of the operations are underperforming. The fly ash and cement businesses are loss-making and management hopes that Lafarge will be breakeven by year end.

There is not as much optimism around the Bulk Commodities segment as the TFR issues continue to constrain performance, which is not expected to improve in FY25. AMSA and Glencore are facing headwinds and have both slowed offtake, resulting in a weaker volumes outlook. What may help the segment in the tough year ahead is the export of anthracite at a c. 40% premium to contract prices and the strong manganese price which resulted in volumes doubling.