Kal Group reports 4.6% dip in H1 2025 headline earnings

South African manufacturing and agriculture company Kal Group has reported a 4% dip in headline earnings per share for the first half of 2025. Despite this decline, the group, which also operates as one of the country's largest independent fuel and convenience operators, has announced dividends for shareholders. In an interview with CNBC Africa, CEO Sean Walsh discussed the challenges faced by the company, the strategies being implemented to navigate the current economic environment, and the outlook for the future. During the interview, Walsh addressed the factors contributing to the revenue decline, highlighting a significant drop in total sales due to lower revenue in the fuel division. He emphasized that although the company experienced a decrease in revenue, operating profits remained relatively stable, demonstrating resilience in the face of challenging market conditions. One of the key challenges mentioned by Walsh was the impact of the difficult trading environment in South Africa, influenced by both local and global factors. However, he reassured investors that the company had taken measures to strengthen its balance sheet by reducing debt, enabling it to capitalize on growth opportunities in the future. Walsh also discussed the need for stable governance and logistics infrastructure to support business growth in the country. He emphasized the importance of creating an environment conducive to investment to stimulate economic activity and mitigate the uncertainty faced by businesses. Despite the overall decline in revenue, Kal Group's agri-business segment, which includes retail branches, fueling stations, and packaging distribution centers, reported positive performance. Walsh outlined plans to optimize growth in this division by focusing on market share expansion through virtual sales channels and professional services to support farmers in investment decisions. Looking ahead to the second half of 2025, Walsh expressed optimism about the company's performance, citing several positive indicators such as increased profitability during the Easter holidays and improved agri-mark profitability. He highlighted plans to add new fuel sites and quick service restaurants to the network, anticipating a boost in margins and retail spend per liter. In terms of the global agricultural sector, Walsh discussed the potential impact of tariffs on South African exports to the United States. While acknowledging some challenges, he emphasized that the sector had adapted to geopolitical uncertainties and was poised for growth, particularly with the stabilization of fertilizer and chemical prices. Overall, Walsh's outlook for Kal Group and the agricultural sector remains positive, with plans for expansion and strategic investments to drive future growth. The company's resilience and proactive approach to market challenges position it well for a stronger performance in the second half of the year.