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Afrox - Sound Results With Good Growth Opportunities

Release Date: 26/10/2006 15:49:38      Code(s): AFX
Afrox - Sound Results With Good Growth Opportunities                            
AFRICAN OXYGEN LIMITED                                                          
(Incorporated in the Republic of South Africa)                                  
(Registration number 1927/000089/06)                                            
JSE Share code: AFX                                                             
NSX Share code: AOX                                                             
ISIN: ZAE000067120                                                              
("Afrox" or "the company" or "the Group"                                        
MEDIA RELEASE                                                                   
Thursday 26 October 2006                                                        
African Oxygen Limited (Afrox) once again produced sound results, growing well  
ahead of inflation for the year ended 30 September 2006.                        
A pleasing performance was recorded with industrial operating profit up 15      
percent at R684 million, net profit up 12 percent at R437 million and revenue   
higher by 19 percent at R4 billion.                                             
On a like for like basis, industrial headline earnings per share were 19 percent
higher at 141,6 cents per share. This is the base off which Afrox will measure  
itself in the future.                                                           
Managing director, Rick Hogben said, "Significant value has been released for   
shareholders in disposing of our final 20 percent in Life Healthcare. For an    
investment of R375 million made this time last year, we realised cash of R850   
million and a net profit of R362 million.                                       
Afrox"s balance sheet remains strong and return on capital employed is at a very
acceptable 30 percent. Gearing is at the negligible level of 3,3 percent, and   
provides substantial scope to leverage the company"s growth opportunities.      
The sound results enabled the board to declare a final cash dividend of 40 cents
per share (2005: 40 cents).                                                     
This is covered 2,18 times by earnings. In addition the board declared a special
cash dividend of 60 cents per share from the sale of company"s remaining        
shareholdings in the Life Healthcare Group.                                     
Including the interim of 46 cents, the total distribution for the year is 148   
cents a share.                                                                  
Through the year economic conditions remained favourable and demand for all     
gases and products reached high levels, resulting in considerable pressure in   
supply, mainly for atmospheric gases, carbon dioxide, Handigas, mig welding wire
and certain welding products.                                                   
Afrox is well positioned to grow further and has a number of key projects, which
are scheduled for commissioning within the next financial year. These include   
six gas producing facilities, a new MIG welding wire plant and the entire       
upgrading of Afrox"s Gases Operation Centre.                                    
Hogben said that many more growth projects were being investigated.             
"Perhaps the most important is the possibility of acquiring major storage       
facilities at the coast to allow for future imports of liquefied petroleum gas, 
where refineries are unable to meet demand. It will also increase our strategic 
stock holding for this key energy product".                                     
Turning to the shortage of liquefied petroleum gas (LPG) that hit South Africa, 
Hogben says, "Under extremely difficult circumstances our Handigas business     
worked hard to minimise the disruptive effects of supply shortage of LPG from   
domestic refineries. We reverted to importing some product but the entire       
shortage resulted in considerably increased operating costs and reduced margins 
in our endeavour to keep customers supplied".                                   
Afrox is an integrated, full spectrum gases business. Each of its               
value-adding segments is inter-dependant. This synergy, from bulk gas production
through to retail, is key to sustainability of performance. Afrox"s brand,      
reliability of supply and high quality of products represents substantial       
intangible asset value.                                                         
Hogben said "All businesses produced sound results, ahead of inflation. Our     
growth strategy is focussed on increasing capacity, upgrading manufacturing     
facilities and modernising infrastructure to improve efficiencies. We continue  
our efforts to improve customer service levels and product offerings".          
The bulk merchant business, a mainstay of Afrox, for which the industrial and   
special products business units are a vital internal customer, produced         
acceptable results at high levels of capacity utilisation.                      
Other highlights for the year include a new parent company for Afrox. The BOC   
Group was acquired on 6 September 2006 by Linde AG of Germany. The two companies
are highly complimentary with minimum geographic overlap. The Linde Group is now
the world"s leading industrial gases business with global sales of Euro 12      
billion and R&D spend of Euro 1,4 billion. The Group employs 55 000 people in 70
countries on all continents.                                                    
In conclusion Rick Hogben says, "We welcome The Linde Group as our new parent   
company. We look forward to continue future growth, driven by sound investment  
in the business and growing demand from an economy, which we expect to remain   
buoyant over the coming years. Consequently we are well positioned to continue  
to deliver real growth and earnings well in excess of inflation.                
Issued by African Oxygen Limited                                                
For further information                                                         
Rick Hogben - Managing Director         (011) 490-0606 or 082-452-4037          
Chris Fieldgate - Investor Relations    (011) 490-0430 or 082-495-1481          
Date: 26/10/2006 03:49:41 PM Supplied by www.sharenet.co.za                     
Produced by the JSE SENS Department                                             

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