Afrimat shares surge after substantial earnings growth forecast

Afrimat, the mid-tier mining and materials powerhouse, saw its share price climb by 2.87% on Tuesday morning, buoyed by an impressive forecast for its headline earnings per share (HEPS) for the six months ending August 31.

The company revealed it expects HEPS to soar by between 90% and 95% compared to the same period last year, a promising sign for investors despite the stock’s recent struggles.

Trading at R40.53, Afrimat’s shares have experienced a decline of roughly 40% since reaching R67.60 last year. However, the anticipated HEPS figures, projected to range between 100.7 cents and 103.4 cents—up from 53 cents in the previous year—may have sparked renewed investor interest.

The positive outlook extends to earnings per share (EPS), which is expected to increase by 74% to 79%, projected between 101.4 cents and 104.3 cents for the interim period. This growth is attributed to significant operational enhancements across several segments of the company’s diverse portfolio.

The group’s construction materials sector experienced a rocky start but significantly improved sales volumes, especially with operational efficiencies at the recently acquired Lafarge quarries. Increased market share stemming from better customer service and reliable product availability played a crucial role in this turnaround.

In a similar vein, Afrimat's fly ash business reported strong volume and profitability growth, with July 2025 marking the highest production month since its acquisition. The management expressed confidence in sustaining this growth momentum into the second half of the year, bolstered by robust demand and operational capacity upgrades.

However, the company’s cement operations faced challenges, predicted to be loss-making. Fortunately, improvements in plant reliability and reduced production disruptions have been noted, along with continued high demand for its low-carbon, high-quality cement products.

In a boost for the bulk commodities segment, local iron ore sales surged significantly, with volumes increasing from 339 648 tons to an impressive 830 662 tons compared to August 31, 2024. Likewise, international exports rose to 396 384 tons from 349 084 tons, though full-year volumes are projected to align with last year's figures, primarily due to logistical limitations during a maintenance shutdown of the Saldanha export line.

Operational advancements at the Nkomati Anthracite Mine facilitated processing of 100 000 tons in July, although a strategic assessment led to the mothballing of the underground section due to decreased demand from ferrochrome smelters. August saw the production levels fall to 136 216 tons amid structural economic challenges, which resulted in the temporary shutdown of all local ferrochrome smelters.

On a brighter note, the reopening of the Mozambique border enabled Afrimat to export two shipments of anthracite, totalling 61 861 tons, a rise from 41 568 tons in the previous period. Management is currently evaluating options to mitigate the impact of ongoing market disruptions on the Nkomati operation.

In the industrial minerals segment, late orders from the agricultural sector are expected to be favourable in the second half of the year, although the segment has faced volume reductions from the ferrochrome operations shutdown.

Looking to the future, progress has been made to leach and extract rare earths from stockpiles. Phosphate material sales for the agricultural market continue to provide critical cash flow for the Glenover project, with operating losses showing signs of improvement.

Afrimat’s impressive recovery illustrates not only the resilience of its operations but also a renewed assurance for shareholders as it navigates the complexities of a challenging economic landscape. With advancements in various sectors and strategic management interventions in place, the company is well-prepped to embrace the challenges and opportunities that lie ahead.

BUSINESS REPORT