Zeder harvests less from investments

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Zeder harvests less from investments

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Published Date: 2019-10-04 | Source: Stephen Gunnion | Author: Stephen Gunnion

Zeder harvests less from investments

The investment holding company says its portfolio continues to feel the impact of tough conditions in the food and related business sector.

Zeder has warned of a sharp drop in first-half earnings due to continued tough conditions in the food and agricultural sector, where the bulk of its investments lie.

In a trading statement, the investment holding company said recurring headline earnings per share (HEPS) for the six months to end-August would be between 60.2% and 66.3% lower than those reported a year ago, while attributable earnings per share (EPS) would be down by 3.7% to 7.3%. Its sum-of-the-parts (SOTP) valuation at the end of August was R6.22 per share, up from R5.64 in February but lower than the R6.67 reported a year ago.

The SOTP is calculated using the quoted market prices for all its JSE-listed investments and internal valuations for unlisted holdings. Together with recurring HEPS, it uses the two as benchmarks to measure its performance.

The group's investments include a 28.6% stake in Pioneer Foods, 29.3% of Quantum Foods and 41.1% of Kaap Agri. It has majority holdings in Capespan Group, The Logistics Group and Agrivision Africa. Pioneer's share price received a boost in July, as did Zeder's, after it confirmed a R24.4 billion buyout offer from US food and beverages giant PepsiCo. Zeder has supported the deal, which would result in R6.4 billion in return for its stake in Pioneer.

Apart from weak conditions, HEPS were impacted by the upward fair value adjustment of its investment in China's Joy Wing Mau Group prior to its disposal by Capespan, which boosted earnings in the previous corresponding period. The lower decrease in attributable EPS was mainly due to the reversal of a non-headline impairment charge on its investment in Pioneer, which was recognised at the end of last year.

Zeder said its interim reporting period traditionally represented the lesser half of its portfolio's annual earnings due to the input-cost cycle of many of its agricultural investments, as well as softer consumer spending.

It expects to publish its interims results on 8 October. Its shares fell 0.7% to R4.62 yesterday.





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