ChemSpec earnings rise despite plant fire

Trade and Industry Correspondent ALTX-listed paint manufacturer and retail Chemspec yesterday posted a 10% rise in headline earnings to R22m for the year to March on growth in its international business.

CEO Strath Wood said the trading environment was “very good” in the international market, where sales climbed 249%.

ChemSpec (CSP) specialises in automotive, industrial and decorative coatings and supplies a range of adhesives and solvents. Revenue rose 23% to R580m, bolstered by growth of 50% in the automotive segment.

“The fire in our Phoenix plant reduced revenue by R25m, which would have increased our growth to 28%. This exceeds the average annual compound growth rate of 23% seen over the past 15 years,” Wood said.

The group's decorative operations bore the brunt of the Phoenix plant fire and the resulting reorganisation within operations to accommodate production had a knock-on effect on the industrial and wood finish business.

“Our decorative segment did not grow compared with the comparative 12-month period. However, if one takes into account the compensation for loss of profits due from the insurers of R10m, revenues would have been 36% better,” Wood said.

ChemSpec, which enjoys sizeable sales and distribution footprint in Africa and international operations in the US, Asia-Pacific region and Australia, saw operating profit margins improved to 9% from 5,2% in the prior period.

Basic earnings per share increased to 10,01c from a loss of 2,16c per share.

Source: Business Day

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