KAP Industrial's annuals could take 45% earnings hit
DURBAN - KAP Industrial Holdings has warned that its full-year earnings could decline by as much as 45 percent for the year to end June, before the effect of any potential impairments.
Last year the diversified industrial group reported headline earnings per share (Heps) of 45.9 cents a share and earnings per share (Eps) of 41.4c.
“A further trading statement will be issued as soon as there is a reasonable degree of certainty as to the likely range of the expected decrease in Heps and Eps, taking into account any potential impairments,” the group said.
The group said in a trading statement on Friday that while its annual impairment testing was not yet complete, there was a reasonable degree of certainty that its earnings before interest, tax, depreciation and amortisation (Ebitda) from continuing operations will be between 19 percent and 28 percent lower compared to last year.
Its operating profit before capital items is expected to decline by between 35 percent and 48 percent compared to last year’s R2.53 billion.
KAP said it continued to generate positive operating profit and positive cash flow from operations throughout the various levels of lockdown, despite the significant restrictions imposed on some of its operations and the general reduction in consumer spending during this period.
“This reflects the resilience of KAP’s diversified industrial business model and positions the company well for a post-Covid-19 recovery,” the group said.
The Integrated Timber division performed well up to the March 27 lockdown and said demand for its products remained high.
“Major maintenance and upgrade projects at its Ugie and Piet Retief particleboard plants were completed on budget and both plants were successfully recommissioned,” KAP said.
The group’s Automotive Components division was severely impacted by the Covid-19 outbreak due to some international automotive assembly customers suspending operations before the official South African lockdown, which had a significant impact on the division already in March.
However, the group said the division’s performance to the end of February was ahead compared to last year’s performance despite the subdued automotive retail sales and lower new assembly volumes.
In the Integrated Bedding, the group said the division performed well up to the lockdown period and profits remain in line compared to last year despite a subdued furniture retail sector.
The Polymers division operated throughout the lockdown period, supplying essential products, primarily into the food packaging sector.
“Although the division was not able to operate at full capacity, efficiency levels were not unduly affected by the lower operating levels or supply chain disruptions. Demand for its products remained stable throughout the lockdown and has shown steady improvement as restrictions have been eased,” the group said.