Afrimat had mixed results in FY26, with revenue improving but profitability declining. This was largely due to the weaker performance of Nkomati, which was affected by the ferrochrome smelter shutdown, resulting in a weaker H2 than H1.
Despite the headwinds, the group had many positives. The cement business recorded strong revenue growth, and the operating loss declined. The iron ore business maintained good profitability despite lower iron ore volumes, prices, and the exchange rate. Additionally, the anthracite business achieved more than 200kt of export sales, helping to mitigate the losses.
More encouragingly, most of the problems have been resolved, and Afrimat is entering FY27 with positive momentum. We expect a positive swing in operating profit, as many of the costs incurred in FY26 have been removed from the base.
Aggregates continue to support volumes and margins. Management has gained much better control of the cement business and has planned effectively for kiln shutdowns, securing supply throughout the maintenance period. Anthracite volumes are rising as the Lion smelter is operational and exports for the year are largely secured. In addition, we expect a recovery in Industrial Minerals and see encouraging developments in the LFP battery market. The only area of concern remains lower local iron ore sales, which will likely weigh on top-line growth. Nevertheless, margins should remain resilient despite lower volumes and increased fuel and shipping costs.