South Africa’s Kaap Agri leverages on online trade to expand customer reach

SOUTH AFRICA – Kaap Agri, a group trading in agricultural, fuel and related retail markets in Southern Africa has tapped into the ecommerce segment by developing online sales platforms aimed to reach new customers outside its traditional strongholds.

The company owns rurally located Agrimark trading stores offering a one-stop-shop for a wide range of agricultural and lifestyle products such as grains, liquor, pet food, mechanization and packaging.

According to CEO Sean Walsh, the agricultural services specialist was digitally developing mechanisms to sell to customers that were not in proximity to its trading footprint.

This was a cost-effective way of breaking into new trading areas that might not justify the expense of a bricks and mortar trading outlet — particularly in areas where there already was a dominant agribusiness service provider, reports Business Live.

To give the company a new look, Kaap Agri has further introduced a refreshed logo and consolidated its trade and retail businesses under one brand.

Agrimark is being positioned as the main customer facing brand with the group’s trade and retail businesses all adopting the Agrimark brand name.

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New growth projects will also carry the Agrimark name, like Agrimark Pet, the group’s new standalone pet store, the first of which was opened in Cape Town in December last year.

Meanwhile, the JSE listed company has produced a robust financial performance amidst a COVID-19 resurgence during the first quarter of its current financial year to September 2021.

Kaap Agri’s Q1 headline earnings increased by 38.2% from US$5.6m to US$7.75m

Statutory revenue increased by 16.9% and gross profit by 19.6% compared to the first three months of the previous year.

Recurring headline earnings for the quarter grew by 35.4% from R84.0 million (US$5.7m) to R113.7 million (US$7.76m). Headline earnings increased by 38.2% from R82.2 million (US$5.6m) to R113.6 million (US$7.75m).

“The Group has traded well during Q1 driven by a strong operational performance across all divisions as well as the increase in grain trading income,” said Walsh.

He further highlighted that a recovery from the impact of COVID-19 in the second half of the 2021 financial year seems quite probable but cautioned against relying on first quarter results for full year expectations. 

“The group delivered a great first quarter performance, and whilst the overall outlook for the year is encouraging, one should temper full year expectations somewhat. Recurring headline earnings performance is not expected to repeat to the same degree going forward,” he said.

The group is positive about the overall outlook for agriculture. Agri-related revenue grew by 3.5%, compared to the previous year. Expectations for fruit farming are very positive, whilst a record wheat, barley and canola harvest are currently in storage.

Kaap Agri’s grain division operates 14 silo complexes which experienced their largest wheat harvest intake in 10 years. The group expects that wine grape farmers may experience cashflow pressure as a result of the impact of COVID-19 regulations.  

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