Kaap Agri reports 2.2% drop in headline earnings

Kaap Agri, a leading agricultural retail company, has reported a 2.2 per cent decrease in headline earnings per share for the year ended in September. Despite facing the challenges brought about by the COVID-19 pandemic, the company managed to stay resilient and navigate through the tough times. The CEO, Sean Walsh, spoke to CNBC Africa about the year under review and the future outlook for the business. Walsh described the year as one of two parts, with the second half being the most impacted by the pandemic. He estimated that profitability was dampened by 8.4% during the year, with an estimated loss of 554 million in revenue. However, the company was able to save operational expenses of 47 million in the same period. Walsh mentioned that despite the challenges, they still achieved an increase in core earnings by 4.6%, showing the company's ability to adapt and thrive in a difficult environment. Looking ahead, Walsh expressed optimism, noting an uptick in most of their business units in the last few months of the year. The agricultural sector, in particular, has shown resilience and growth, providing opportunities for Kaap Agri to continue supplying critical inputs to farmers. The fruit sector has had a successful year, and the wheat harvest in the Western Cape is expected to be above average, indicating positive prospects for the industry in the coming months. While acknowledging the impact of COVID-19 on infrastructure projects, Walsh highlighted a rebound in activities, with irrigation product sales increasing significantly in the last three months of the financial year. The company also witnessed growth in packaging materials due to the rise in fruit sector exports and a surge in retail sales across various categories. In a show of confidence in the company's financial position, Kaap Agri declared a final dividend of 50 cents per share, signaling their preparedness for potential challenges in the future. Walsh emphasized that the business had proven its resilience and recovered across all business units to pre-COVID levels or higher. He underscored the importance of a conservative approach to dividends to protect the business and ensure sustainable growth. Despite the positive outlook, Walsh highlighted the importance of monitoring the debtors' book and focusing on delivering value to shareholders. He outlined three focus areas for the future, including reducing exposure to intensive properties in the retail fuel segment, optimizing underperforming sites, and seeking high-value investment opportunities. With a strategic review underway, Kaap Agri is poised for growth and remains vigilant in ensuring the company's stability and long-term success.