- KAP has said Covid-19 and a weakening macroeconomic environment are behind the company's drop of an estimated 13% in revenue.
- Leadership estimated a reduction of around R2.5 billion in revenue, and a reduction in operating profit of R800 million.
- CEO of KAP, Gary Chaplin, said the company saw improvement in demand as the lockdown restrictions relaxed.
Manufacturing and logistics company KAP Industrial Holdings has blamed the economic impact of the Covid-19 pandemic and a "weakening macroeconomic and socio-political environment in South Africa" for its estimated 13% drop in revenue and 27% drop in earnings.
KAP leadership said in an announcement on Thursday that the impact of Covid-19 pandemic was a reduction in revenue of around R2.5 billion and a reduction in operating profit of around R800 million.
KAP CEO Gary Chaplin said many of KAP's divisions were closed during Level 5 of the national lockdown aimed at curbing the spread of the virus. He said KAP divisions were only partially operating under Level 4.
"In many respects this year was a perfect storm for KAP, but despite these challenges the group generated cash from operations of R2.1 billion and remained within its banking facilities and relevant financial covenant ratios," said Chaplin.
KAP announced its industrial audited results for the year ended in June 2020 on Thursday. On the day, the company's share price dropped 2.87% to R2.37. The share price has stayed just below the R3 mark for most of the past six months and reached a low of R1.27 in April.
KAP blamed non-cash impairments to its balance sheet amounting to R3.3 billion on increased imbalance in global polymer supply and demand and the impacts of Covid-19.
Chaplin said it was not all doom and gloom, as KAP's products and services were still in demand and the company saw a steady improvement in demand as the lockdown restrictions were relaxed.
"Our financial forecasts continue to reflect that the company will be profitable and cash-generative for the foreseeable future. As a result, the board does not currently anticipate a need to recapitalise the company through a capital raise," he said.
Chaplin said the company was "well positioned" to capitalise on any business opportunities that this environment may present.
In April last year, two Steinhoff executives, Messers TJR de Klerk and LJ du Preez, had to resign from the board of KAP, after the retailer reduced its 26% indirect stake in KAP.