Insimbi Refractory & Alloy's revenue rises despite strong rand

Oct. 11, 2010 - The strong rand was having a negative effect on AltX-listed metals trading specialist Insimbi Refractory & Alloy, but the group remained focused on strategic acquisitions in the six months ahead.
On Friday, Insimbi reported a 35.1 percent increase in revenue to R412 million for the six months to August, following improved market conditions, which included higher demand. The company's range of activities includes a foundry, steel trading and non-ferrous metals trading as well as operating a kiln.
The group provides the steel, aluminium, cement and foundry industries with commodities such as ferrous and non-ferrous alloys, as well as refractory materials, by integrating the supply, logistics and technical support functions.
Chief executive Pieter Schutte warned that the next six months would be volatile as the group was expecting a decline in demand for certain commodities.
"The strong rand is affecting manufacturing in certain sectors and this could slow economic recovery. We therefore expect some challenges ahead," he said.
Demand for the group's products had increased in the review period, with the exception of its rotary and refraction divisions, which had historically lagged the steel and foundry cycles by up to six months. In the review period, the company had acquired the entire share capital of Cape Town-based Metlite Alloys and Metlite Properties.
Metlite's core operation is in the manufacturing of various aluminium alloys. It is a second tier supplier to many of the major automotive component manufacturers in South Africa and abroad.
Insimbi said the acquisition of Metlite would provide various cost efficiencies and synergies for the group into its Western Cape customer base, particularly that of production and transport costs which would be greatly reduced.
"The combined entity will also provide the company with greater buying power for various raw materials. It is Insimbi's intention to further expand its footprint and service offerings into the Western and Eastern Cape," the company said in a statement.
Schutte said the group remained focused on expanding its "basket" of products.
"We will continue to evaluate strategic acquisitions in various industries which will bring synergies and add value to the group," said Schutte.
The group on Friday announced that its aluminium plant in Dunswart in Benoni had faced various operational challenges throughout the current financial year and as a result the plant had continued to make losses.
"The board of Insimbi has taken a decision to close the plant until further notice to avoid any further negative impact on the group," the company said in a statement.
Insimbi shares rose 3.9 percent on Friday to close at 53c.