Better harvest for Kaap Agri


Better harvest for Kaap Agri

Published Date: 2019-11-29 | Source: Stephen Gunnion | Author: Stephen Gunnion

Better harvest for Kaap Agri

The agricultural group credits its ongoing diversification, growth strategy and resilience for an improvement in earnings.

Kaap Agri has reported a rise in full-year earnings as a growing contribution from its petrol stations and a revival at Wesgraan helped offset continued tough conditions in the agricultural sector.

The group said the recovery from the recent drought had been slower than expected, while consumers remained severely stressed, impacting its Urban Region Agrimark stores. But after a below average third quarter, it experienced an encouraging uplift in the final three months of its financial year from both an Agri and Retail perspective. The Wesgraan recovery followed a good wheat harvest last year. It has also expanded its The Fuel Company chain of petrols stations and on-site convenience stores. Annual fuel volumes, including sites awaiting regulatory approval, rose 10.4%.

Revenue rose 29% to R8.5 billion in the year to end-September, boosted by acquisitions including last year's purchase of KwaZulu-Natal based Partridge Building Supplies. Like-for-like growth of 7.6% was driven by increased transactions and higher fuel prices. Excluding fuel, product inflation measured just 0.2% over the period. It said gross profit growth didn't match revenue growth due to the changing sales mix, the difficult business environment and fuel price fluctuations.

The group's trading result was also hampered by lingering drought conditions in parts of the Western and Northern Cape, specifically on its Agri-Retail and Manufacturing divisions. It attributed a 15% rise in earnings before interest, tax, depreciation and amortisation (EBITDA) to R550 million to its diversification, ongoing investment and resilience. Earnings per share (EPS) rose 13% to 394.98c and headline EPS increased by 14% to 397.85c. It grew recurring HEPS by 6% to 375.19c and it's lifted its total dividend by 5.8% to 123.5c per share.

The group said it was suitably positions to take advantage of an improvement in trading conditions.

Its shares jumped 7.1% to R30 yesterday.

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