enX Group, the JSE-listed company that provides branded equipment, products and services to a range of industries, said yesterday that headline earnings per share increased sharply by 110% to 61 cents in the six months to end-February 2024.
Pre-tax profit increased by 70% to R141 million. Revenue from continuing operations increased by 5% to R2.12 billion. Revenue was supported by increased volumes of polyethylene and speciality chemicals and components products, with increased generator sales and related services primarily to large data-centre customers.
While volumes of toll-blending were up considerably, average selling prices were down due to the pass through of lower base oil pricing.
The comparative period ended February 28 2023 was restated due to the classification of enX's leasing and fleet management business, Eqstra, as a held for sale and discontinued operation as at August 31, 2023. enX shareholders approved the sale of Eqstra to Nedbank at a shareholder meeting on April 3, 2024.
enX directors said the results for the six months ended February 29 reflected excellent performances, despite the challenging economic conditions.
Cash was returned to shareholders via a special distribution of R1 per share on November 27, 2023.
Net debt to equity including the disposal group held for sale increased to 57% (August 31, 2023: 39%) as debt was used to finance the growth in Eqstra's leasing book.
Operating profit from continuing operations before net finance costs, and the share of profit from associates and impairments, increased 63% to R124m supported by better margins particularly in Lubricants and Chemicals.
On the outlook, the directors said the most significant macro risks to the group’s performance were potential social and financial market volatility, given the possible outcomes of the national elections and the impact of higher global interest rates for an extended period.
“The consequences, particularly to supply chains, of geopolitical events may affect the group, as well as the general deterioration of South Africa’s critical infrastructure,” they said.
Conditions in the AG Lubricant and WAG business were expected to remain stable. Levels of growth in New Way Power were dependent on the extent and duration of load shedding in presenting opportunities, and its markets were saturated.
While there was a robust order book for the sale of generators to data-centre customers for the next nine months, profits had reduced in months where the frequency of load shedding was low.
Longer lead times arising from supply chain constraints, both locally and abroad, had increased net working capital requirements, but liquidity in all the businesses remained robust.
BUSINESS REPORT