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KAP Industrial’s PG Bison helped lift the group’s performance. Picture: SEBABATSO MOSAMO
KAP Industrials, whose businesses range from transporting fuel to producing automotive components and timber, said on Wednesday that the diversified nature of its asset base held it in good stead in the six months to end-December.
Its polymers division, represented by Safripol, has benefited from the surge in international oil prices, as well as the dislocation in global supply chains.
Used in the production of a variety of plastic products, polymers are a byproduct of the oil refining process, with prices therefore following a similar trend to oil.
“The higher the oil prices the higher the polymer prices, and with that, better margins,” said CEO Gary Chaplin, adding that demand for polymers was high across the spectrum of packaging, agriculture, shade netting and containers.
With strong demand, increased prices and improved margins for all three polymers produced, Safripol performed well for the period, bolstered by its product range and regional sales mix.
KAP said local customer demand remained buoyant due to “strong consumer demand, which was supported by our local manufacture and supply”. Overall production volumes increased 7%, enabling scale benefits and margin improvement, together with strategic investments in inventory.
“Across the board, we saw fairly strong demand, which I suppose gave us the ability to select our markets quite carefully in terms of trying to do less single-use plastics and more durable applications,” said Chaplin.
The diversified group with a market capitalisation of about R12.4bn on the JSE operates in 11 sub-Saharan countries, with leading industry positions in the wood-based decorative panel, sleep products, polymers, automotive components, and supply chain-based services sectors.
PG Bison, which manufactures decorative wood panels, also boosted the group’s financial performance.
Headline earnings per share from continuing operations rose 62% to 37.2c year on year and group revenue was up 13% to R13.6bn.
Chaplin said despite past struggles to try to recover timber cost increases in that segment, the company was able to recover cost increases in this period by raising selling prices. Increased demand together with increased production levels gave KAP the ability to recover full costs.
Its automotive business, represented by Feltex, felt the effect of the global shortage of semiconductor chips, while its contractual logistics division held up well in SA, with the exception of general freight and cement.
Logistics operations in the rest of Africa fared poorly due to a state of emergency in Botswana, which was lifted in October 2021, and reduced cross-border work due to civil unrest in SA and Eswatini.
The passenger transport division, which operates Gautrain buses, experienced lower passenger numbers partly as a result of the pandemic.
With a number of growth and expansion plans in the pipeline, KAP forecasts it will continue on the momentum built this year well into the next.
“We have come out of a period where we were largely inward focused with a lot of internal growth and operational efficiency initiatives and we are certainly turning our attention outwards to look at where potential acquisitions could add to our growth plans, said Chaplin.
KAP’s share price ended the day up 2.3% to R4.89, having risen by about 21% over the past year.
Update: February 23 2022 This story has been updated with new information.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
First-half profit surges at KAP Industrial
KAP Industrials, whose businesses range from transporting fuel to producing automotive components and timber, said on Wednesday that the diversified nature of its asset base held it in good stead in the six months to end-December.
Its polymers division, represented by Safripol, has benefited from the surge in international oil prices, as well as the dislocation in global supply chains.
Used in the production of a variety of plastic products, polymers are a byproduct of the oil refining process, with prices therefore following a similar trend to oil.
“The higher the oil prices the higher the polymer prices, and with that, better margins,” said CEO Gary Chaplin, adding that demand for polymers was high across the spectrum of packaging, agriculture, shade netting and containers.
With strong demand, increased prices and improved margins for all three polymers produced, Safripol performed well for the period, bolstered by its product range and regional sales mix.
KAP said local customer demand remained buoyant due to “strong consumer demand, which was supported by our local manufacture and supply”. Overall production volumes increased 7%, enabling scale benefits and margin improvement, together with strategic investments in inventory.
“Across the board, we saw fairly strong demand, which I suppose gave us the ability to select our markets quite carefully in terms of trying to do less single-use plastics and more durable applications,” said Chaplin.
The diversified group with a market capitalisation of about R12.4bn on the JSE operates in 11 sub-Saharan countries, with leading industry positions in the wood-based decorative panel, sleep products, polymers, automotive components, and supply chain-based services sectors.
PG Bison, which manufactures decorative wood panels, also boosted the group’s financial performance.
Headline earnings per share from continuing operations rose 62% to 37.2c year on year and group revenue was up 13% to R13.6bn.
Chaplin said despite past struggles to try to recover timber cost increases in that segment, the company was able to recover cost increases in this period by raising selling prices. Increased demand together with increased production levels gave KAP the ability to recover full costs.
Its automotive business, represented by Feltex, felt the effect of the global shortage of semiconductor chips, while its contractual logistics division held up well in SA, with the exception of general freight and cement.
Logistics operations in the rest of Africa fared poorly due to a state of emergency in Botswana, which was lifted in October 2021, and reduced cross-border work due to civil unrest in SA and Eswatini.
The passenger transport division, which operates Gautrain buses, experienced lower passenger numbers partly as a result of the pandemic.
With a number of growth and expansion plans in the pipeline, KAP forecasts it will continue on the momentum built this year well into the next.
“We have come out of a period where we were largely inward focused with a lot of internal growth and operational efficiency initiatives and we are certainly turning our attention outwards to look at where potential acquisitions could add to our growth plans, said Chaplin.
KAP’s share price ended the day up 2.3% to R4.89, having risen by about 21% over the past year.
Update: February 23 2022
This story has been updated with new information.
mahlangua@businesslive.co.za
gumedem@businesslive.co.za
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