Crookes diversifies to sidestep currency volatility and drought
Crookes Brothers MD Guy Clarke says the company is rapidly diversifying its crop base, farm locations and markets, which would assist in counteracting the effects of currency volatility and drought.
In the year to end March 2017, the agricultural and property development company reported a 22% increase in revenue from continuing operations to R664m. Headline earnings per share rose 15.8% to 424.1c. Supply constraints following severe drought conditions resulted in higher prices for sugar cane and bananas, which led to these businesses contributing greatly to the overall results, the company said.
Operating profit increased 73% to R125m, from R72m in 2016. This was despite a R10m operating loss recorded in the company’s deciduous fruit segment that resulted from a substantial decline in hard currency export prices in the year, accompanied by the strengthening of the rand.
“We are very pleased with these results,” said Clarke. “This is the first year that we have not received the full benefit from the Komati farms sold to the government and leased back to Crookes,” he said.
The 2,500ha Komati Estate in Mpumalanga was sold to the government in 2010 in terms of the land restitution programme.
Clarke said the new financial year was likely to be challenging as the company would undertake large-scale replanting of drought-damaged fields.
“The Western Cape is in a dire situation, with most dams at record lows. The performance of the deciduous division in 2018 will depend on rainfall in winter months,” said Clarke.
He said that the group had earmarked R226m in capital expenditure for the new financial year. “We plan to extend our banking facilities to bring our ongoing projects to production over the next two years. The additional cash flows generated from new projects is targeted to drive the group into a free cash flow phase in 2019,” said Clarke.
The company declared a final dividend of R1.15 a share, bringing the total to R1.65, better than the previous year’s R1.50.