Farmworkers farming spinach. The City of Cape Town and the Philippi Economic Development Forum have signed a memorandum of agreement. Picture: Michael Walker/African News Agency (ANA) archives.
DURBAN - Kaap Agri’s share price rose more than 17percent on the JSE on Friday after the group said that it expected to report a surge in earnings for the year to the end of September, despite the slower-than-anticipated recovery from the drought.

Kaap Agri said on Friday its revenue had increased by 29.1percent to R8.5billion, up from R6.5bn compared with a year earlier, with like-for-like comparable growth of 7.6percent.

“This growth in revenue was driven by a 10.6percent increase in the number of transactions.

"Product inflation, excluding the impact of fuel inflation, is estimated at 0.2percent, with fuel inflation being 6.1percent,” the group said.

The share gained 17.77percent on the JSE to close at R28.50 at the end of the day.

The group said despite the impact of the drought, its earnings grew between 12.9 and 15.2 percent, headline earnings grew between 14 and 16.3percent, and recurring headline earnings increased by between 6.2 and 8.3percent.

As a result, the group expects its earnings per share (Eps) to be between 394.88cents a share and 402.86c, representing an increase of between 12.9 and 15.2percent compared with Eps of 349.80c reported last year.

Its headline earnings per share (Heps) were expected to be between 397.72c and 405.76c, representing an increase of between 14 and 16.3 percent compared with Heps of 348.98c compared to last year.

The group’s recurring headline earnings per share would be between 373.88c and 381.44c, representing an increase of between 6percent and 7percent compared to last year’s 354.10c.

“The trading results have been hampered by a prolonged impact of drought conditions in certain areas of the Western and Northern Cape, specifically in the agri-retail and manufacturing divisions. The subdued retail sector had the largest influence on the urban region agrimarks. Notwithstanding a below average third quarter, we experienced an encouraging uplift in the fourth quarter to end the year strongly from both an agri and a retail perspective,” the group said.

The group said that its diversification, ongoing investment and resilience continued to generate strong earnings growth under the circumstances, with earnings before interest, tax, depreciation and amortisation increasing by 15.9percent.

Kaap Agri will release its results on November 28.