AECI continues to reward shareholders despite COVID-19 uncertainty
Mark Dytor, CEO of AECI joins CNBC Africa to break down the company’s results which saw the JSE listed chemicals group declare a gross interim cash dividend of 100 cents apiece for the six months ended June 30.
Wed, 29 Jul 2020 16:30:56 GMT
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AI Generated Summary
- AECI declares an interim dividend despite COVID-19 impact, showcasing confidence in cash generation and business control.
- The company defers the 2019 final dividend with a commitment to ensure shareholders receive their earnings, reflecting proactive financial management.
- AECI navigates challenges in the mining sector and implements stringent measures to manage the spread of COVID-19 within the organization, prioritizing employee health and safety.
South African chemicals group AECI has faced challenges due to the impact of COVID-19 on various sectors, resulting in a 450 million rand profit decline. Despite this setback, the company has chosen to declare an interim dividend of 100 cents per share for the six months ended June 30, displaying confidence in their ability to generate cash and weather the storm. Mark Dytor, CEO of AECI, explained that the decision to continue rewarding shareholders with dividends rather than preserving cash signals the company's control over its business operations, containment of spending, and confidence in cash generation for the future. This move is notable considering the current trend among companies to hold onto cash in light of the uncertain economic environment caused by the global pandemic.
In addition to the interim dividend, AECI has also deferred its 2019 final dividend to later this year, with a commitment to ensure shareholders receive their due earnings. Dytor emphasized the company's intention to pay the deferred dividend before the year-end, pending clarity on dates and recipients. The initial decision to defer the dividend was made to conserve cash as the company adapted to the effects of COVID-19, reflecting a proactive approach to managing financial resources in the midst of uncertainty.
Amidst the challenges posed by the pandemic, AECI has shown resilience through innovative ventures like producing sanitizers to meet the increased demand. While recovery is evident in regions like Australia, South Africa's mining sector faces ongoing disruptions and risks due to restrictions on workforce capacity and the difficulty of controlling contamination in close working environments. The company remains cautious about the outlook for the mining industry in the coming months but anticipates a gradual return to normalcy by the first or second quarter of next year.
As part of its response to the pandemic, AECI has implemented stringent measures to manage and prevent the spread of COVID-19 within the organization. A dedicated task team comprising senior management, medical advisors, safety practitioners, and IT experts meets daily to track and monitor employees, ensure workplace safety, and provide support for those affected by the virus. By staggering shifts, providing medical supplies, and emphasizing social distancing, the company has managed to contain outbreaks within the workplace and maintain essential services without significant disruptions. Despite facing challenges, including a heightened risk due to the concentration of employees in high-density areas like Gauteng, AECI remains committed to prioritizing the health and safety of its workforce.
In conclusion, AECI's decision to reward shareholders with dividends and its proactive approach to managing the impact of COVID-19 demonstrate resilience and stability in the face of uncertainty. By focusing on cash generation, maintaining essential operations, and implementing robust health and safety measures, the company aims to navigate the challenges posed by the pandemic and emerge stronger in the months ahead.