Afrimat profits surge, but diesel spike is a worry

Construction materials and mining group Afrimat posted at 20.3% jump in group revenue to R10 billion for the year ended 28 February 2026 on Thursday.

This saw its headline earnings per share (Heps) and total dividends for the year surge by more than a third, while it also made headway on margins across the group. But, looking ahead, the group says it is mindful of the potential impact of higher energy prices resulting from the war in Iran.

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During FY2026, the group used approximately 27 million litres of diesel. Post the financial year-end, there’s been a spike in diesel prices due to the war in the Middle East, some of which has already been passed on to its customers.

“Afrimat is actively working on minimising the impact of diesel price increases on the business,” the company said in its results filing.

It reported a 9.6% increase in operating profit to R523.7 million in the period under review.

The JSE-listed miner, with a market cap of more than R5 billion, noted that the increase in the cost of sales was primarily due to higher-than-normal repairs and maintenance in its cement business.

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Cash generated from operations amounted to R831 million. Although this is below Afrimat’s customary levels, the company believes the work done during the financial year “puts cash generation on a firmer footing for the future”.

This, together with cash from the sale of non-core assets and properties, expected in the new financial year (FY2027), will be used to pay down debt.

“In last year’s balance sheet, a R1.6 billion revolving debt facility was classified under current liabilities as per International Financial Reporting Standards requirements. However, this did not accurately represent the nature of the debt,” the company said.

Debt restructure

In February 2026, the debt was restructured, where R1 billion was converted into a five-year medium-term amortising loan, with repayments beginning in the upcoming financial year.

Heps for FY2026 was 95.8 cents per share, up almost 33% from the previous year. In its half-year results, Afrimat delivered 101.9 cents per share, which turned to negative 6.1 cents per share due to Nkomati losses in the second half of the financial year, the group explained.

“This was caused by the Glencore-Merafe ferrochrome smelter shutdown and lower profitability in the iron ore business, which was both volume and price-driven,” it said.

Afrimat acquired the Nkomati mine in Mpumalanga in 2021. It says a reduced electricity tariff for the ferrochrome industry could dramatically improve Nkomati’s prospects.

The outcome of the National Energy Regulator of South Africa’s decision on reduced tariffs is expected in June 2026.

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Afrimat’s construction materials division reported a collective revenue surge of 20.7%, from just over R4.5 billion to almost R5.5 billion, with aggregates up 11.2% and cement up over 54%.

Bulk commodities

Revenue from its bulk commodities unit surged 15.7% compared to the previous year. The iron ore mines’ operating profit jumped 35.3%, to R605 million.

Afrimat said the first half of the year delivered strong volume performance from local iron ore sales, which was partially offset by a softer trading environment in the second half. Despite this, the group still achieved year-on-year volume growth, increasing local sales volumes from 876 215 tons to more than 1.5 million tons.

Despite Transnet not being able to provide capacity to fill the group’s rail allocation of 870 000 tons per annum, with export volumes remaining 17% below this allocation, the company said: “The work being done by the new Transnet management team to fix a broken and ailing iron ore export line is to be commended”.

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Afrimat’s shares firmed over 2.5% by around 2pm, following the release of its latest results. The group declared a total dividend of 33 cents per share for FY2026, up 32% year-on-year.