Drought continues to hamper Kaap Agri

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Drought continues to hamper Kaap Agri

Published Date: 2019-05-13 | Source: Stephen Gunnion | Author: Stephen Gunnion

Drought continues to hamper Kaap Agri

The agri-services group says the recovery in Wesgraan and the impact of new petrol stations will come through in the second half.

Agricultural conditions in the Western Cape have been slow to bounce back from the recent drought, which continues in the Northern Cape. That's affected Kaap Agri's first-half performance. Fortunately, fuel sales are doing well, as is turnover from the convenience stores and quick-service restaurants attached to its The Fuel Company (TFC) petrol stations. Revenue at its Trading division has also been given a boost by last year's acquisition of a 60% stake in KwaZulu-Natal farming and building supplies retailer Underberg Forge.

Trading grew revenue by 24.1% in the six months to end-March but operating profit before tax was up just 0.7%. TFC grew revenue by 45% and operating profit by 24.7% as it expanded its site network. Wesgraan, its grain handling and storage business, grew revenue by 26.6% and operating profit by 16.8% as the business continued its recovery.

Group revenue rose 28.7% to R4.39 billion, with like-for-like growth of 10.7% and deflation of 0.5% - excluding fuel inflation. Gross profit rose by a lesser 15.6% as margins contracted due to increased sales of low-margin agri products, fuel price increases and pressure on retail margins. Headline earnings per share (HEPS) increased by 1.4% to 224.17c and recurring HEPS, which exclude once-off items, rose 3.2% to 230.34c. It's raised its interim dividend by 4.7% to 33.5c per share.

Its shares closed 8.4% up at R34.50 on Friday.





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