Diversity drives BKB’s excellent turnaround performance

In the past year BKB has successfully addressed a number of challenges while delivering strong earnings growth. The value of its business grew 19% year-on-year to R13.2bn, while earnings before interest, taxation and dividends grew 66% from R170.2m to R282.5m. The group posted a profit before tax of R148.9m for the 12 months to end-June 30 2021, compared with R18.8m in the previous year.

The group’s improved financial results can be ascribed to its diversified business model, in particular the strong performances of its fibre, livestock, retail trading and sugar businesses.

Outstanding performance from the grain storage and handling affiliate within PakHouse Brands contributed to the excellent results. The results were supported by a disciplined approach in managing costs and working capital, as well as a focus on improving efficiencies and margins.

“The diversity of the group’s operations has again demonstrated to be a significant strength during these times.  Throughout the past financial year a sharp focus has been on restricting non-essential expenditure, carefully managing working capital and conserving cash resources,” says MD Johan Stumpf.

Stumpf says BKB has managed the impact of Covid-19 well and remained agile and flexible to the changes forced on it by the pandemic. “Our priority was protecting the health and wellbeing of our employees and their families, and the group took a proactive approach in dealing with the pandemic. The longer-term impact of the virus, especially on the macroeconomic environment, remains to be seen. However, BKB is represented on a broad spectrum of products, from basic foodstuffs to luxury products, and this diversification will mitigate the impact.” 

Financial highlights include an earnings per share increase of 587% to 133c a share (2020: 19c a share). Headline earnings a share increased 259% to 132c a share (2020: 37c a share).  The overall balance sheet position improved with net debt reducing by R66.6m due to solid operating cash inflows and disciplined working capital management. The board proposed a gross dividend of 40c a share (2020: 5c a share), which is in line with its targeted and consistent dividend cover of about three times earnings. 

“During the year under review, BKB has both improved its financial results and strengthened its financial position. BKB is pleased with the group’s current year free cash flow generation of R100.6m, which equates to 95.9% of net profit after tax. The group’s focus for the year ahead will remain on maintaining conservative debt levels, while positioning itself for future growth and opportunities. The group is listing on the Cape Town Stock Exchange, which should result in a simpler share trading environment, while creating more liquidity,” says financial director Jannie van Niekerk.

“All in all, this is a significant improvement on last year and a creditable performance given the challenges faced by businesses in many parts of SA. The resilience and dedication of BKB’s employees through this challenging year is acknowledged, and this would not have been possible to achieve without them,” says Stumpf.

“Despite the tough environment during the past year, we again demonstrated that BKB’s core values of service excellence, entrepreneurship, driving results, valuing our people, and caring for the environment determine not just how we do business today, but also how we’re building the BKB of the future.”

The group’s annual report, including its audited annual financial statements, is available for viewing on BKB’s website.

This article was paid for by BKB Group.