- The home-improvement trend during lockdown has benefitted KAP Industrial, which owns bed group Restonic.
- Problems with global supply chains during the pandemic have also encouraged a switch to local products.
- But the group closed its iconic Greyhound and Citiliner bus services - and it has no plans to resume that business.
KAP Industrial has benefitted from lockdown-fatigued South Africans turning to home improvement to spruce up their homes.
The industrials, chemicals and logistics group is the owner of wood panel maker PG Bison, whose products are used for kitchen units, bathroom cabinets and office cupboards. It also owns bed manufacturer Restonic.
Over the past 17 months of the country’s Covid-19 lockdown, consumers have had to adjust to limited public activity and KAP CEO Gary Chaplin says it’s a trend that helped the group improve its results.
"With the different levels of lockdown, we saw a lot of redirection in consumer spend, so less money spent on travel and entertainment and alcohol," said Chaplin.
Instead, consumers turned to home improvement for their homes, which now have to serve as offices and spaces for leisure activities.
"And obviously with people spending more time at home, we enjoyed really strong demand for both our decorative cupboards and our sleep products. So, that’s helped us a lot," said Chaplin.
On Friday, the group released its results for the year ended 30 June 2021, which showed that KAP’s revenue grew by 11% to R24 billion and it generated R3.5 billion in cash. Its headline earnings per share also increased, by 146% to 43c leading the group to declare a dividend of 15c per share.
Chaplin added that the disruption of global supply chains, due to lockdowns, also benefitted the group, as demand for locally manufactured goods increased. And it’s a trend he believes will continue as global disruptions hit different countries, that shut down at different times, following Covid-19 resurges.
However, the pandemic has hit other parts of its business hard. In February, KAP halted its iconic Greyhound and Citiliner bus services - and it has no plans to resume that business.
"Generally, our business operates on a business-to-business format so, although many of our products are ultimately used by consumers, we generally don’t deal with consumers on a direct business context and that’s one business where we did," he said, explaining that it was not a space KAP envisioned returning to.
With regards to the group’s growth prospects, Chaplin said there is a lot of opportunity in other African countries. KAP has road freight, agricultural and mining operations in nine African countries, including Botswana, Malawi, Eswatini and Madagascar.
In these countries, the group will focus on expanding its agricultural services, and is also looking at entering the rail network.