Kaap Agri revenue up 5.4% despite drought crunch

SOUTH AFRICA – Kaap Agri, the 2017 JSE listed trader in agricultural commodities reported that its revenue in six months ended 31 March 2018 grew 5.4% to US$271.14 million despite harsh climatic conditions that affected most of its agricultural commodities, reported Fin24.

The harsh market environment was coupled with low consumer and business confidence plus a constrained spending power of customers, all factors impacted by dry conditions and impact of a strengthening rand on exporters, particularly in the fruit industry.

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Although recurring headline earnings per share increased by 7.2% to 223.12 cents, grain handling revenue dropped due to reduced harvests.

Its Wesgraan division including wheat, maize, canola and other small grains was largely impacted in revenues which dropped 30%, in addition to constrained agri sales in other trade regions.

Kaap Agri reports that positive growth in revenue was sustained through expansion and improvement that allowed strong retail growth in non-agri categories although growth in the sector was slow.

Revenue from the trading division, which includes Agrimark retail branches, mechanisation services and spare parts rose 8.3%.

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Increased retail contributed to total revenue as group’s gross margin increased to 17.3% from 16.7% with the company saying diversification strategy protected it from utter loss.

According to CEO Sean Walsh, its ongoing retail and fuel diversification strategy continues to bear fruit despite the negative impact of adverse agricultural conditions in the province.

An interim dividend of 32.0 cents per share was declared, compared to 29.4 cents per share in 2017, representing an increase of 8.8%.

“Although the current year remains challenging, our growth strategies are firmly on track to deliver superior returns in line with our strategic medium-term plans and we remain optimistic that the coming agricultural seasons should improve,” Walsh said in a statement.

“Continuous improvement of our customer’s engagement experience is key and we will continue to invest in our people and into revenue and cash generating capital expenditure.”

Zeder, an investor in agribusiness is a major shareholder in Kaap Agri and it invest in agricultural, food, beverages, grain, and related industries with a focus on agribusiness industry.

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