Rolfes targets further international expansion

Image courtesy

Image courtesy

Chemicals group Rolfes yesterday reported a 26.2% increase in revenue for the six months to December 31 2013 to R517.6m and an increase in gross profit margin from 21.1% to 21.4%.

However, a sharp increase in operating costs meant that EBITDA fell slightly from R47.6m to R46.8m for the period.

The rise in costs was mainly due to the inclusion of recently-acquired water purification company PWM and expansion activities in the rest of Africa. Headline earnings per share dropped 5.7% to 19.9 cents per share.

Revenue from its mining and water chemicals division jumped from R4.9m in the previous year to R25.7m for the last six months of 2013. This reflected the impact of PWM on top line growth. However, Rolfes’ agricultural chemicals division remained the largest contributor to both revenue and earnings.

“We like the acquisition of PWM as water treatment is a big issue going forward,” said Richard Middleton of Investec Asset Management. “The big opportunity is the treatment of mine effluent, which we desperately need in this country.

“A lot of new business growth will also be on the agricultural front where Rolfes produces environmentally-safe agro-chemical products.”

The group did not pay an interim dividend – it’s chosen to rather invest current capital in expansion projects. The group’s aggressive expansion plans saw exports up 35.1% to R87.0m.

Rolfes’ share price grew over 600% between 2010 and early 2013, but declined around 22% over the last year. It currently trades at a price-to-earnings multiple of around 11.5x.




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