SOUTH AFRICA – Agribusiness and food-focused investment group Zeder has posted 158% increase in recurring headline earnings per share to 9.8 cents due to strong recovery in earnings from most of its investee companies.
Zeder has a 27% stake in the South African packaged goods company, Pioneer Foods, representing 49.1% of its entire portfolio.
Its underlying investment portfolio which also includes Capespan, Zaad, Kaap Agri, Agrivision Africa and Quantum Foods was valued at US$854.14 million on 31 August 2018.
Earnings for the six months ended 31 August were helped by upward fair value adjustment of the investment in Joy Wing Mau Group in China which was sold through its subsidiary Capespan Group Limited at a consideration of US$5.04 million.
Zeder indicated that the disposal would enable inject growth capital into the core fruit and logistics divisions of Capespan, improving debt levels while also providing Zeder with improved cash resources at a group level.
According to the company, the period proved successful despite challenging macro conditions with most company portfolios stabilizing or reversing lower levels of profitability reported in the previous interim period.
The period reflects the annual input-cost cycle associated with many of its agriculture investments as well as the softer half of the annual consumer sales and spending cycles associated with its other investments.
Pioneer Foods reported a 3% marginal decrease in group turnover for the half year ended March 2018, a reflection of price deflation in soft commodities such as maize and wheat.
Zeder on the other hand had said its yearly results were impacted by challenging trading conditions after most of its portfolio companies Capespan, Zaad and Agrivision Africa reported losses.
“Zeder’s first-half earnings traditionally represent the lesser half of its annual earnings, as this period reflects the annual input-cost cycle associated with many of its agriculture investments as well as the softer half of the annual consumer sales and spending cycles associated with its other investments,” said Chief executive Norman Celliers.
While regional economies and investment climate remains constrained, the company in its JSE update indicated it remains committed to invest in organic growth opportunities and seek new opportunities to compliment the portfolio.