Afrimat faces toughest trading conditions since 2006 listing

Mining and materials group Afrimat Limited expects to report a sharp drop in interim earnings for the six months ended 31 August 2026, driven by geopolitical shipping disruptions, a stronger rand, and reduced iron ore demand.

In a trading update and statement published on Sens on Wednesday, the company confirmed that it faced its most difficult trading environment since listing in 2006.

Headline loss per share (Hlps) is expected to be between 60 cents and 55 cents, compared to headline earnings per share (Heps) of 101.9 cents reported in the previous corresponding period.

Earnings per share (EPS) is projected to decline by 95% to 100%, landing between 0.1 and 5.2 cents, down from 102.7 cents previously. The variance between EPS and Hlps stems from profits recognised on Competition Commission-mandated divestitures and non-core asset sales.

Iron ore pressures and shipping disruptions

Afrimat highlighted iron ore as the primary driver of its reduced profitability over the six months.

Export revenues were constrained by a stronger rand alongside a 49.1% surge in shipping costs, which the group attributed to disruptions linked to the Iran conflict. Consequently, average mine-gate revenue per ton fell by 16.4%.

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Domestic iron ore operations also encountered headwinds during the first quarter: “Domestic iron ore was adversely affected in Q1 as a domestic customer drew on non-Afrimat stockpiles it had secured previously, leading to lower and irregular sales volumes.”

Although domestic volume trends began to recover in the second quarter, total domestic iron ore sales volumes remained 36.5% below the comparative period. Additionally, temporary shutdowns across ferrochrome smelters weighed on anthracite demand.

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Aggregates resilience and cement performance

In contrast to its bulk commodities division, Afrimat’s aggregates and fly ash operations delivered margin expansion and strong operating profit growth, benefiting from ongoing efficiency initiatives, effective marketing, and strong client retention.

The group noted that these operations validate its earlier acquisition strategy: “Afrimat’s aggregates and fly ash operations performed strongly, supporting the original rationale for the acquisition of the Lafarge quarries.”

Read: Afrimat surpasses R10bn in revenue despite headwinds

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Between FY2022 and FY2026, the aggregates and fly ash business delivered a compound annual growth rate (CAGR) of 36.3% in operating profit, achieving an operating profit margin of 18% in FY2026, which expanded further during the reporting period despite fuel price increases.

However, the acquired cement operation continued to incur an operating loss during the early part of the period, despite significant investments in engineering, management capacity, and equipment repairs.

Balance sheet deleveraging

To protect cash flow and manage its balance sheet, Afrimat focused on deleveraging through the sale of non-core brick-and-block businesses, mandated regulatory divestitures, and the liquidation of surplus iron ore stockpiles.

These cash generation measures successfully reduced the group’s debt-to-equity ratio to below 50%, with management targeting a further reduction toward 25%.

Looking ahead, the group continues to expand its production capacity across its minerals portfolio:

Manganese: Secured a new MECA III allocation of 240 000 tons per annum for seven years, with the first vessel already shipped.
Iron ore: Added the Doornfontein deposit, which will replace Demaneng and offer a lower stripping ratio and high-quality direct-shipping ore.

Afrimat is scheduled to publish its full interim financial results on or about 22 October 2026.

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