AECI Sees Increasing Water Chemicals Sales Propelled by Africa

AECI Ltd. (AFE), South Africa’s biggest chemicals and explosives manufacturer, expects sales of water-treatment chemicals to grow by more than 10 percent in 2013, propelled by demand in sub-Saharan Africa.

“The opportunities in Africa are developing quite fast,” Louis du Toit, managing director of AECI chemicals unit ImproChem (Pty) Ltd., said in a phone interview from Johannesburg yesterday. “We see double-digit growth on the African Continent.”

ImproChem, a fully owned subsidiary of AECI, expects total sales to be about 800 million rand ($81.6 million) in 2013, of which about 500 million rand will come from water treatment, du Toit said. About 25 percent of revenue comes from sub-Saharan Africa, excluding South Africa.

ImproChem is expecting sales growth in Nigeria, Ghana, Democratic Republic of Congo and Zambia, according to du Toit. The company is selling chemicals to African municipalities to treat tap water and sewage, in addition to the mining, petrochemical, food and beverages industries. “There is enough water available,” du Toit said. “The quality of supply is lagging demand.”

AECI shares gained 0.3 percent to 118 rand by 1:19 p.m. in Johannesburg. The stock has advanced 48 percent this year, making it the eigth-best performer on the 166-member FTSE/JSE Africa All Share Index. (JALSH)

Economic Growth

Sub-Saharan African economies are expected to grow by a combined 5.9 percent in 2014, compared with 5.1 percent this year, the International Monetary Fund said in a July 9 report. This compares with a 2014 forecast of 3.3 percent in South Africa, the continent’s biggest economy and ImproChem’s biggest market.

AECI is planning to complete an acquisition in Brazil in 2013 or early next year, Chief Executive Officer Mark Dytor said on July 24. The company is targeting acquisitions in the chemicals industry, allowing it to broaden its revenue base and markets. AECI acquired General Electric Co.’s chemical and monitoring solutions business in South Africa and Sub-Saharan Africa in July 2012.

“It is our strategy to grow via acquisition,” du Toit said. “We are looking for local acquisitions in the African continent. Should a global player come up with a possible acquisition opportunity, we will probably be looking at it.”

To contact the reporter on this story: Kamlesh Bhuckory in Johannesburg at kbhuckory@bloomberg.net

To contact the editor responsible for this story: Simon Thiel at sthiel1@bloomberg.net

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