Diversification has helped stem effects of drought, Kaap Agri says
Revenue from the trading division, which includes Agrimark retail branches, mechanisation services and spare parts rose 8.3%
Kaap Agri said on Monday that its diversification strategy shielded it from the crippling drought in the Western Cape, which is a vital source of income for the group.The PSG Group-aligned company operates predominately in the agricultural space‚ though it also owns a fuel company as part of its diversification strategy.Revenue was up 5.4% to R3.4bn in the six months to March, from the year-earlier period, in line with its recent market guidance. But like-for-like comparable store rose a modest 2.9%.The group’s gross margin increased to 17.3% from 16.7%, with the company saying this was a firm indicator of the increased retail contribution to total revenue.The company said Wesgraan — which encompasses grain handling and the storage of grain and related products, seed processing and potato seed marketing — felt the squeeze of the drought.Wesgraan revenue dropped 30% as a result of reduced harvests in the Western Cape and resulted in a 24.6% reduction in operating profit before tax.Bu...
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