South Africa’s Kaap Agri revenue rises 8% as wheat business pays

 

SOUTH AFRICA – South Africa’s agricultural retailing and service company, Kaap Agri has recorded an 8% increase in revenues to US$477 million arising from a remarkable increase in its important wheat business, reports Business Day.

In the year to end September, the company said wheat seed sales had recorded a 40% increase resulting in better revenues.

The company also noted a 12% rise in the number of transactions.

The bumper harvest comes after a prolonged drought in the Western Cape   which had seen the wheat storage reduce to the lowest level since 2005.

Speaking after the release of the year results, Kaap Agri Managing Director, Sean Walsh said that storage subsidiary Wesgraan had already received 88% more wheat than in the past year.

The financial year 2019 is also expected to be a great economic time for the company after a preliminary survey predicts a normalised harvest in the coming year.

“Agricultural conditions in the Western Cape have largely improved year on year and farm dam levels are in a good position,” he said.

Walsh said that Kaap Agri will continue to focus on its strategic goals is important for the company’s recovery from the subdued 2018 performance.

“We remain on track to achieve our strategic medium-term plan target of a minimum 15% compound annual growth rate [CAGR] in recurring headline earnings at a 15% return on equity.”

Kaap has seen its recurring headline earnings increase up to 0.7% to 354c a share, reflecting a five-year CAGR of just more than 14%.

Following the returns, the shareholders set to receive a final dividend of 84.7c as declared by the company, pushing the full-year pay-out up 4% to 116.7c a share.

The impressive performance from the retail sales, recording a higher income generation compared to agricultural sales has been a major breakthrough to the company.

As a tradition, November and December have been the company’s most retailing months with the managing director saying they expect this to reflect a sustained retail recovery.

Kaap Agri has more than 200 operating points under the brands Wesgraan, Agrimark, The Fuel Company (TFC), Expressmark, Pakmark, Liquormark and Agriplas.

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