KAP International reports higher earnings

Published Sep 8, 2010

Share

It pointed to earnings per share including discontinued operations of 20.6 cents, from an earlier loss of 8.8 cents.

KAP International Holdings is a holding company of subsidiaries and associate companies invested in a portfolio of diverse manufacturing businesses.

The group reported revenue of R3.97 billion, from R3.84 billion, and an operating profit of R194.5 million, from R132.6 million.

The board declared a final capital distribution of 7.0 cents.

The group said its results reflected the impact of a restructuring which management completed early in the business cycle (2008/9) in respect of the fresh meat and automotive divisions, as well as the disposal of the automotive leathers division.

"This restructuring should help to provide more predictability of earnings going forward," it said.

Regarding, Feltex Automotive, KAP said vehicle build remained nearly constant in the current financial year, but are at similar levels to 2003/4.

The restructuring initiatives in the previous year led to strong profit growth, albeit off a low base.

Working capital was well managed and cash generation good. The trim division took advantage of the difficult economic circumstances to increase its market share further, the group said.

"Trading conditions are expected to continue to be stable, but tight, as a significant proportion of vehicles produced in South Africa are exported to the United States and Europe whose economies still face significant challenges," KAP said.

It said that its industrial footwear division continued to perform well. "Wayne Plastics continued to deliver good volumes."

United Fram's volumes and prices remain under pressure due to competition from imports. The turnaround in Mossop has been completed and the division is now delivering better trading results.

The group noted that Hosaf increased local sales of PET by 65 percent over the last financial year as a result of the closure of a former competitor, Sans Fibres, and the expanded plant was running efficiently.

"Market conditions during the period under review remained satisfactory although disappointing that the impact of the World Cup on volumes has not been as large as originally anticipated," it said.

In the consumer segment KAP said volumes in the cannery operations of Bull Brand remained low, although the value-added manufacturing fared better.

"The division's strategy of increasing exports remains a focus area. The reorganisation of the production process has also resulted in better efficiencies and operational cost savings, and the division now requires increased volumes for these improvements to reflect in the results," it said.

For Brenner Mills, KAP said the maize price reduced due to a bumper local and US maize crop, which had an effect on both prices and margins, and resulted in lower profitability.

"Brenner continues to provide good operating profits and cash flow," the group said.

"As a result of the Jordan strategy to focus on lower volume, higher margin products, pairs sold declined by 10 percent to 2.1 million, while revenue declined by only 2.5 percent."

"Although the strong Rand assists the imported products, some retailers have opted to import directly from China. The premium Asics brand continues to dominate the running market in South Africa," KAP said.

It pointed to strong growth in the hospitality sector due to the World Cup, while the retail sector remained relatively flat as the market continues to feel the effects of the recession.

The hospitality sector year on year increased in volume by 15 percent, while volumes to the major chains reduced by 4 percent, the group said.

Looking forward KAP said it would continue to focus on strong cash generation and strict cost control. - I-Net Bridge

Related Topics: