Kaap Agri’s share price rose by more than 10 percent on the JSE yesterday morning after the group released a positive trading update for the six months to the end of March. Photographer: Nadine Hutton/Bloomberg
Kaap Agri’s share price rose by more than 10 percent on the JSE yesterday morning after the group released a positive trading update for the six months to the end of March. Photographer: Nadine Hutton/Bloomberg

Kaap Agri shares rally on positive earnings outlook

By Sandile Mchunu Time of article published Apr 22, 2021

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DURBAN - KAAP AGRI’S share price rose by more than 10 percent on the JSE yesterday morning after the group released a positive trading update for the six months to the end of March, continuing the positive momentum reported in the first quarter of the financial year.

The JSE-listed group that trades in agricultural, fuel and related retail markets in Southern Africa said it expected its headline earnings per share (Heps) to increase by between 21.6 percent and 26.5 percent, to between 294 cents and 306c a share, up from last year’s Heps of 241.83c.

Its earnings per share (Eps) were likely to rise by between 21.4 percent and 26.3 percent, to between 294c and 306c, up from 242.21c reported a year earlier, while its recurring headline earnings per share were expected to fall by between 299c and 312c, representing an increase of between 20.7 percent and 26 percent compared with 247.65c reported last year.

“Kaap Agri considers recurring headline earnings to be a key benchmark to measure performance and to allow for meaningful year-on-year comparison,” the group said.

The share climbed to a day-high of R42 a share after the release of the trading update, up from Tuesday’s closing price of R38, before closing the day at Rxxx.

The expected increase in earnings comes after the group reported a strong first-quarter performance in February, and said it was positive about the overall outlook for agriculture, with agri-related revenue increasing by 3.5 percent in the quarter.

The first quarter saw its revenue inching up by 16.9 percent, while gross profit surged by 19.6 percent for the quarter to the end of December despite the continued impact of Covid-19 on its operations.

The group also reported a 35.4 percent increase in recurring headline earnings to R113.7 million for the quarter, and headline earnings increased by 38.2 percent to R113.6m.

Kaap Agri said it traded well during the first quarter, driven by a strong operational performance across all divisions, as well as the increase in grain-trading income.

Its retail-related revenue was up 14.5 percent for the quarter, while total group fuel litre growth of 11.8 percent was achieved in the three months, despite the December impact of the Covid-19 pandemic.

Kaap Agri has 217 operating points in eight South African provinces, as well as in Namibia. Its divisions consist of Agrimark, Liquormark, Wesgraan, Pakmark, Mechanisation, Agrilog and The Fuel Company.

The group expected to release its half-year results on May 6.

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