21 February 2025 | FNB Week Ahead & Economics Weekly

Several local companies will report interim results next week:

• Sasol – In its recent trading statement management guided for headline earnings per share (HEPS) to decrease between 26% and 36% to between R13 and R15, with adjusted EBITDA expected to be between R22 billion and R25 billion, representing a decrease of between 11% and 22%. The result was impacted by a 13% lower rand Brent crude oil price as well as significant declines in refining margins and fuel price differentials, compounded by a 5% fall in sales volumes.

• Bid Corp – At the 4M25 mark (to the end of October), despite the challenging macroeconomic environment, the group delivered a robust performance which exceeded the record performance seen in the prior comparative period and was tracking in line with management’s expectations. Bid Corp reported that constant currency HEPS growth was ~8%, with estimated weighted average food inflation of ~2% and forex movements having a 3% adverse impact on rand numbers. Revenue increased 7% in constant currency terms and continued to reach record levels in the first few weeks of November. Trading profit grew ~10% despite a very low food inflation environment. We expect the Christmas trading period to have been robust.

• Impala Platinum – Per management, HEPS are expected to decrease by between 40% and 49% to between 184 cents and 217 cents per share due to weak PGM prices. Sales volumes increased 5% to 1.77 million 6E ounces, but sales revenue decreased to ~R23 800 per 6E ounce sold (1H24: R25 795 per 6E ounce). Implats generated EBITDA of ~R6.5 billion (1H24: R8.4 billion, 1H23: R24.5 billion) and capital expenditure is expected to have decreased to ~R4.0 billion (1H24: R6.8 billion) due to lower levels of growth and replacement capital as projects neared completion.

• KAP – HEPS was guided to be between 16.7 cents and 17.7 cents, representing a decrease of between 19% and 23%. The group’s overall performance was negatively impacted by the ramp-up of PG Bison’s new medium-density fibreboard (MDF) line, which commenced in July 2024. Plant utilisation, sales volumes, and product pricing associated with the new line were not yet optimal due to the ramp-up process and therefore insufficient to offset the higher operating and finance costs related to the new line.

• Motus – In 1H25, management anticipates a steady financial performance y/y. Revenue is expected to grow in the single digits with marginal operating profit growth. Due to lower debt and interest rates, a low double-digit reduction in net finance costs is expected, which will contribute positively to overall earnings. We anticipate a stronger 2H25 operationally than 1H25 due to cyclical tailwinds (lower inflation and lower interest rates) and for lower finance costs to bolster earnings growth through FY25.
• Northam – HEPS were guided to decrease between 44.7% and 54.7% y/y to between 55.0 and 67.1 cents. Revenue fell 3.1% to R14.5 billion, primarily due to a 3.3% decrease in the 4E ZAR basket price to R23 457/oz. 4E. EBITDA came in at R1.8 billion, down 44%, while the margin came in at 12.4% (1H24: 21.3%).

• Truworths – Per its recent trading statement, HEPS are expected to decrease between 4% and 8% y/y. Retail sales rose 2.4% y/y to R12.5 billion. The result was dragged by Truworths Africa where sales declined, and management also noted gross profit margin pressure. On the flipside, the Office UK continued to impress, with growth accelerating from 18W25 (+9.7%). The pressure in South Africa was notable, and the group seems to be struggling amid heightened competitive pressure – not only from local players, but perhaps from international retailers operating locally as well as import-based fast fashion platforms.

• Cashbuild – revenue at 2Q25 was up 6% y/y (new stores: +1%, existing stores: +5%) and up 5% y/y for 1H24. This was a notable point that underscores improved trading momentum. The rate cutting cycle should act as a tailwind for consumer disposable income which, coupled with improved confidence, will likely continue to help lift spending in the DIY and home improvement space.

Full-year results are expected from:

• AB InBev – The group has so far presented numbers that have highlighted resilient underlying demand for the group’s megabrands, especially in the context of slowing global alcohol consumption amid macroeconomic pressures and changing consumer behaviour (moderation). Top-line growth has been supported by ongoing premiumisation, market share gains, and other revenue management initiatives, as well as generally better-than-expected price growth across regions. Continued margin expansion was underscored by positive momentum from 1H24, production cost efficiencies, and disciplined cost management. FY24 EBITDA was guided to grow between 6% and 8%.

• AECI Ltd – Management guided for HEPS to decline between 42% and 32%. This is due to transformation project costs, divesture costs, investment spend on statutory shutdowns and AECI Schirm Germany turnaround spend. AECI Chemicals is expected to report EBITDA improvement of ~25%, driven by stringent cost controls and increased efficiencies notably in AECI Agri Health and AECI Water. AECI Mining is expected to report ~13% lower EBITDA – earnings, particularly in the 1H24, were impacted by R204 million in once off costs, which included alternate sourcing of ammonium nitrate solution during planned plant shutdowns.

 

Listed-property groups will also be well represented next week, with full-year results expected from NEPI Rockcastle, Hammerson, Shaftesbury Capital and Primary Health Properties.
On the corporate actions front, Barloworld will host a general meeting to consider the proposed acquisition of Barloworld by Newco for a cash amount of R120 per share. AGMs will be hosted by Reunert, Oceana, and Spar. Tharisa and Hudaco will trade ex-dividend on Wednesday, 26 February 2024.
The 4Q24 earnings season in the US is near completion, with ~86% of companies in the S&P500 having reported results so far. Around 76% of these have beaten earnings expectations, and ~55% have delivered a revenue surprise to the upside. The aggregate sales growth is ~4.9% and the aggregate earnings growth is ~10.8%.
Our focus this coming week will be on NVIDIA to round off the ‘Magnificent 7’ releases. We also look forward to results from Home Depot, Axon Enterprises, and TJX Companies. In Europe we will have full-year results from Smith & Nephew on our radar.

Economics Weekly – Budget 2025 postponement and key highlights

Finance Minister Enoch Godongwana was scheduled to table the 2025 Budget on 19 February-the first under the Government of National Unity. However, in an unprecedented eleventh-hour announcement, the budget was postponed to 12 March. The delay appears to centre on discussions regarding a potential VAT rate increase from 15% to 17%.

Ahead of the planned tabling, Treasury had shared budget documents-under embargo-with select media and economists, including one of our own. Despite the delay, the embargo has since been lifted. In this week’s publication is a summary of the key elements contained in the budget document, keeping in mind that a new budget could be formally tabled on 12 March 2025.

Please see the full publications attached