Kal Group revenue up 42.7%

The Kal Group, formerly known as Kaap Agri, has caught the attention of investors with its stock price surging almost 6% on the JSE following the release of its annual results. The company reported a remarkable 42.7% increase in revenue, mainly attributed to the acquisition of fuel retailer PEG Retail. However, recurring headline earnings per share saw a slower growth rate of 7.2% to 619.69 cents per share, as load shedding costs took a toll on the bottom line. To shed more light on these results, CNBC Africa interviewed Sean Walsh, the CEO of KAL Group. During the interview, Walsh discussed the impact of fuel prices on the company, emphasizing the importance of closely monitoring the dollar price of Brent crude due to the significant volume of retail fuel sales conducted by the company. He mentioned that even small fluctuations in fuel prices can have notable effects on their operations. Walsh also highlighted the anticipated decrease in diesel prices in December, which is expected to benefit both the company and motorists. The conversation then shifted towards the challenges posed by load shedding in South Africa. Walsh revealed that load shedding costs amounted to 63 million for the year, affecting the company's earnings growth. To mitigate these costs, KAL Group invested in alternative energy sources and started offering energy products to customers, demonstrating proactive measures to combat the impact of load shedding. Despite these challenges, the company still managed to achieve a healthy growth rate for the year. Furthermore, Walsh touched upon the performance of the PEG acquisition, stating that it exceeded expectations in terms of cash generation and overall business performance. He acknowledged the strong growth in convenience retail, particularly in quick-service restaurants. Looking ahead, he anticipated a more moderate growth rate in this segment, influenced by changing consumer behaviors due to load shedding. In terms of future outlook, Walsh expressed optimism about revenue diversification, especially as households might shift towards more home-cooked meals amidst decreasing load shedding. He projected growth in DIY, building materials, workwear, clothing, and pet sales in the coming year. Additionally, he expected a possible uptick in fuel sales if oil prices continue to decrease, leading to increased travel and convenience retail purchases. The interview concluded with a brief discussion on the Namibian market, where KAL Group operates. Walsh highlighted the company's positive market share in Namibia, catering to farmers with agri-related supplies. He expressed confidence in the management team in Namibia and expected steady growth and healthy performance in the new year. Overall, Walsh's insights shed light on KAL Group's strategic approach amidst industry challenges and its plans for sustained growth and revenue optimization.