Fuel retailing helps Kaap Agri survive farming woes
The Western Cape’s drought and jitters over land expropriation contributed to the group’s grain handling and storing division’s profit halving
Expansion into fuel retailing helped Kaap Agri mitigate a collapse in grain handling and storage in its 2018 financial year.
Of the four divisions the group segments itself into, The Fuel Company (TFC) reported the fastest growth with revenue rising 30% to R1.8bn and operating profit 35% to R85.8m.
Kaap Agri said TFC achieved this despite delays in getting regulatory approval to expand its network of garages.
The impressive performance of its fuel retailing arm helped the group grow its overall revenue 2.2% to R6.5bn despite the contribution from its grain handling and storage business, Wesgraan, falling 38% to R439m.
Wesgran's operating profit more than halved to R23.6m from R52m.
"The agricultural environment remains heavily impacted by climatic conditions in the various areas in which we operate as well as foreign-exchange volatility," the results statement said.
"Policy uncertainty, especially with regard to expropriation without compensation, has negatively impacted capital investment and expansions in the agricultural sector."
The bulk of Kaap Agri's revenue and operating profit comes from the division it terms "trading" which houses its retail chain Agrimark and its packaging business Pakmark.
The trading division managed to grow operating profit 9% to R242m on flat revenue of R4.1bn.
Thanks to its fuel retailing arm, the group's overall revenue grew 2% to R6.5bn and net profit 3% to R249m.
Kaap Agri declared a final dividend of 84.7c, taking its total dividend for the year to end-September to 116.7c, a 4.2% increase on the prior year.