AG Industries boosts profits 45%

Headline earnings per share increased from 15.5 cents to 22.5 cents. The group's headline operating profit was up 29% to 84.8 million rand, reflecting strong organic growth in all divisions. Domestic volumes increased in all divisions by a weighted average of 22%.Growth in sales revenue, however, was suppressed by lower selling prices being achieved as the Glass Division in particular reduced prices to counter competition from imports.

The primary driver of earnings growth was the ability of the divisions to grow margin through effective reduction of input costs and overheads.

Manufacturing efficiencies further contributed to profitability.

This resulted in an increase in domestic headline operating margins to 10% from 8% in the comparative year.

International volumes remained under pressure and the stronger Rand impacted negatively on export volumes and margins.

"In the USA, although the break-even target set by management was not achieved, volumes increased by 10% while the overheads were reduced by 27% resulting in a much improved performance for the year.

"Headline operating losses, in the International Division were reduced by 16% when compared with the 2003 year."

The group said it expected its domestic business to yield improved revenues and profitability in the year ahead.

The group also remains committed to growing its international business over the long term.

"This has been a year of considerable change. The aim of this change over the financial year has been to build a solid platform on which to grow both the domestic and international businesses. This aim was achieved and augurs well for growth in the future."