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Kaap Agri delivers solid interims as market welcomes dividend

THE IMPACT of the 2021/22 wheat season had been positive and agricultural conditions for the upcoming wheat season looked encouraging, although always weather-dependent, said Kaap Agri. Picture: David Ritchie, ANA.

THE IMPACT of the 2021/22 wheat season had been positive and agricultural conditions for the upcoming wheat season looked encouraging, although always weather-dependent, said Kaap Agri. Picture: David Ritchie, ANA.

Published May 11, 2022

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KAAP Agri, the agricultural goods and fuel retailer, yesterday said the agricultural sector might endure more challenging conditions ahead with the outlook not only dependent on general weather conditions, but also rapidly rising input costs, particularly fertiliser.

Despite this, in its results for the six months ended March 31, 2020, released yesterday, the JSE-listed company declared an interim dividend of 46 cents per share, a 15 percent increase and a solid set of results.

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Earnings per share increased by 22 percent to 366.56c per share, from 300.39c per share from the prior corresponding period. Headline earnings per share increased by 13.9 percent to 341.61c per share, while recurring headline earnings per share increased by 15 percent to 351.11c per share.

The market welcomed the move, with the share price surging 7 percent on the news to a high of R46.89.

Kaap Agri chief executive Sean Walsh said: “This is only the second time in 13 years that inflation in many of our categories is above 10 percent. Our ongoing diversification strategy and resilience nevertheless continue to yield strong revenue and gross profit growth, despite tough trading conditions.”

While it had posted strong revenue growth across its agri and fuel channels, pressure remained on retail category growth.

“Revenue increased by 26.7 percent to R7.2 billion, up from R5.7bn in the prior corresponding period. Earnings before interest, taxes, depreciation and amortisation (Ebitda) increased by 13.0 percent to R398.3m from R352.4m in the prior corresponding period,” Kaap Agri said.

The impact of the 2021/22 wheat season had been positive and agricultural conditions for the upcoming wheat season looked encouraging, although always weather-dependent, Walsh said.

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Fruit and vegetable production had largely been positive, but significant expansions and infrastructural spend in these sectors had been dampened by weather events and increased input costs due to inflationary pressures.

Kaap Agri said fresh fruit exports might be under pressure this year due to additional supply chain-related costs and lower market prices.

Logistical challenges persisted, however ongoing collaboration between Transnet, logistics operators and farming businesses were expected to assist in improving port efficiency. Industry-wide fuel volume pressures had increased due to consumer resistance as a result of the higher fuel prices.

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The company said The Fuel Company (TFC) retail fuel sites experienced a slow and continued post-Covid recovery in retail fuel volumes, with fuel site convenience and quick service restaurant performance also improving.

“Group fuel volumes decreased by 1.3 percent. Although fuel volumes at the TFC site were reduced by 4.7 percent, a slow and continued post-Covid recovery in retail fuel volumes is being experienced, with fuel site convenience and quick service restaurant performance also improving. Market share gains have been made in non-TFC fuel volumes due to our ability to deliver and our product availability,” the company said.

Moderate growth in general retail was expected, with fuel prices and other inflationary pressures dampening this sector. Quick service restaurant performance continued to recover slowly.

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Although the impact of Covid had lessened, Kaap Agri said it remained cautious over the potential impact of further Covid infection cycles.

Walsh said: “In line with previous years, the first six months’ earnings will contribute more to full-year earnings than the second six months. Management is positive regarding the performance of the business during the coming six-month period.

“The overall performance is expected to be in line with management’s upper range of medium-term targets,” he said.

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BUSINESS REPORT ONLINE

Related Topics:

agriculture

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