Overview

While 2024 was a milestone year as we celebrated our 70th anniversary, it was a challenging one from a business perspective. Despite the excitement surrounding this achievement, we faced a global slowdown across our key markets following the unprecedented post COVID highs. What first seemed like a normalisation of market demand turned out to be a more pronounced downturn in some regions.

Northern hemisphere markets for our ADT are primarily focused on construction and infrastructure development. We saw a weakening in these industries, particularly in Europe, towards the end of 2023 and planned accordingly for 2024. A key contributor to this downturn was the failure of anticipated infrastructure projects to materialise to the extent that was originally planned, which may be attributed to global conflicts and redirected government spending.

Our southern hemisphere markets, largely driven by mining, cooled off more rapidly than expected during the second half of 2024 due to an improvement in supply and lagging demand for commodities driven by lacklustre growth from some of the world's largest economies. The resultant decline in mining equipment demand is expected to continue in 2025.

During 2024, uncertainty surrounding elections worldwide contributed to market hesitation and delayed spending decisions. In South Africa, we witnessed a significant moment in our nation's history with the national elections and the formation of the Government of National Unity ('GNU'). We remain cautiously optimistic that these developments will benefit our country, our economy, and our people.

It is pleasing to note the significant reduction in load shedding in South Africa during 2024, though most companies are now well equipped to manage this when it does occur. At our Richards Bay factory and Jet Park sales operation, we successfully commissioned our grid tied solar power projects, reducing our dependence on the state power producer and reinforcing our commitment to lowering our carbon footprint as an organisation.

In March 2024, we also commissioned an 820kW solar system at our Kindel factory in Germany. This investment supports our long term sustainability goals and makes financial sense in terms of our own power generation and as surplus power is sold back to the grid.

While global demand for yellow metal equipment slowed considerably during 2024, global supply chains normalised, resulting in the highest inventory levels seen across the industry since the 2009 global financial crisis driving increased competition.

While there has been some improvement in South African port and logistics efficiencies, we have had to maintain a level of buffering on certain incoming componentry and the Red Sea conflict is impacting transit times for our European operations. On a positive note, the declining global demand has resulted in a considerably more stable and responsive supply chain in 2024, allowing us to work on reducing overall inventory buffers to more manageable levels.

Throughout this period, our focus has been on consolidation, expense control and cash preservation, and inventory management through aligning production rates with declining sales levels. At the same time, we have prioritised cost containment directed at organisational efficiencies and reinforced our production quality processes across our factories and operations.