Kaap Agri on track for above inflatoin growth

Sean Walsh (Supplied)
Sean Walsh (Supplied)

Kaap Agri, the JSE-listed group trading in agricultural, fuel and related retail markets, says it is well positioned and remains on track to achieve inflation beating growth in the medium-term.

Whilst the past two years were not without challenges, Kaap Agri continues to be positive about the medium-term outlook for agriculture in Southern Africa.

Addressing shareholders at Kaap Agri's recent annual general meeting, CEO Sean Walsh said the group achieved growth in profitability in the financial year to September 2019, despite lower infrastructural development on farms, prolonged recovery from the drought, marginal improvements in fruit harvests and a mid-year retail sales slump.

Although revenue growth of 29.1% was above industry trends and shows healthy top-line growth, it was driven by fuel price inflation and growth from investment activities. This resulted in growth of 6.6% in recurring headline earnings.

For reporting purposes, Kaap Agri is structured into four operating segments, namely Trade, The Fuel Company (“TFC”), Wesgraan and Manufacturing.  
The Trade segment contributed to 58.8% of revenue and TFC a further 29.1%. Wesgraan’s operating profit grew by 113.8%, a direct result of a recovery in the wheat intake after the prior year’s drought. Manufacturing had a flat year impacted by lower than expected agri-infrastructure spend on farms.

"While drought conditions are continuously experienced in various areas of Southern Africa, the company’s diversified exposure to other retail markets bodes well for sustainable growth," said Walsh.

With the country currently struggling with Eskom’s power crisis and load shedding, Walsh said that from a day-to-day transactional point of view, the group’s trade environment is not significantly impacted. The group has invested considerably in power generation over the last few years, with more than 90% of stores equipped to deal with power outages.

"Of major concern, however, is that the current power crisis challenges the sustainability of food production in the country, particularly in the case of water-intensive farming and agricultural production which is heavily reliant on stable electricity supply. It has a knock-on effect right through the production and manufacturing chain and could ultimately lead to further unemployment," Walsh noted.

Kaap Agri’s BEE accreditation level was also improved from a Level 7 to a Level 3.

We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For only R75 per month, you have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today.
Subscribe to News24
ZAR/USD
14.85
(+0.05)
ZAR/GBP
20.35
(-0.07)
ZAR/EUR
18.04
(-0.06)
ZAR/AUD
11.55
(-0.14)
ZAR/JPY
0.14
(-0.05)
Gold
1870.83
(+0.06)
Silver
25.87
(+0.23)
Platinum
1103.00
(+0.08)
Brent Crude
55.55
(+0.23)
Palladium
2386.75
(+0.49)
All Share
64108.51
(+0.79)
Top 40
58857.76
(+0.85)
Financial 15
11997.84
(-0.16)
Industrial 25
85626.27
(+0.66)
Resource 10
63102.03
(+1.34)
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Please select an option Oops! Something went wrong, please try again later.
Results
Yes, and I've gotten it.
21% - 692 votes
No, I did not.
52% - 1733 votes
My landlord refused
28% - 928 votes
Vote