KAP Industrial Holdings reduced its net debt by R522 million in the six months to end December to R6.64 billion. Picture: Karen Sandison/African News Agency(ANA)
KAP Industrial Holdings reduced its net debt by R522 million in the six months to end December to R6.64 billion. Picture: Karen Sandison/African News Agency(ANA)

KAP reduces debt by R522m

By Sandile Mchunu Time of article published Feb 24, 2021

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DURBAN - KAP Industrial Holdings reduced its net debt by R522 million in the six months to end December to R6.64 billion, down from R7.16bn compared to last year, despite Covid-19 disruption on its operations.

KAP operates in the timber, automotive, bedding, polymer and logistics sectors under brands such as PG Bison, Feltex, Restonic, Safripol and Unitrans.

The diversified industrial group was boosted by a 201 percent increase in cash generated from operations to R1.7bn, compared to R571m reported a year earlier.

Chief executive Gary Chaplin said the impact of Covid-19 had presented a complex and unpredictable business environment during 2020.

“While most areas of our business are performing well, there are obviously areas that remain severely restricted by Covid-19, where we’ve had to make some tough decisions,” Chaplin said.

The group reported a 1 percent decline in revenue to R12.11bn while trading profit increased by 8 percent to R1.3bn.

Its headline earnings per share (Heps) increased by 2 percent to 23 cents a share, and earnings per share (Eps) increased by 8 percent to 24.4c.

KAP did not declare an interim dividend, in line with its historic practice.

Chaplin explained that their business was able to withstand the impact of the pandemic as their model was diversified across different sectors, supplying primarily non-discretionary goods and services, which reduced risk, and the firm’s decentralised management structure allowed them to adapt quickly as Covid-19 restrictions changed.

“Most of our operations have performed well for the half-year to December, supported by particularly strong demand in the timber, bedding and polymers businesses. We are very pleased with how quickly robust demand has returned to our markets and we have received fantastic support from our customers,” he said.

Integrated bedding reported a 37 percent increase in operating profit to R183m and polymers showed a 21 percent increase in operating profit to R176m, while integrated timber declined by 16 percent to R304m.

The company recently completed a restructure of its automotive components division and announced the suspension of services in its Intercity and Tourism passenger operations.

Looking ahead, Chaplin said that while the environment remained unpredictable and challenging, they were excited about the group’s prospects.

“During this period, we have used the time effectively to improve our business and identify several growth opportunities for the future. The sectors in which the company operates have shown steady improvement as Covid-19-related restrictions have been relaxed,” Chaplin said.

The group also announced R2bn of investments for the expansion of their PG Bison operation in eMkhondo.

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BUSINESS REPORT

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