Kaap Agri to pay final dividend as it eyes recovery
While the pandemic derailed expected strong revenue growth, the group is optimistic it will benefit from improved conditions
Agriculture-focused Kaap Agri, whose interests range from grain handling services to convenience stores, says the Covid-19 crisis has revealed the benefits of its diversification strategy, with its results better than expected even as the pandemic hits fuel sales and prompts changes in consumer behaviour.
The company, which also trades in the agricultural, fuel and related retail markets in Southern Africa, said on Thursday the pandemic derailed what would have been strong growth in its year to end-September, when revenue rose 1.5% to R8.57bn.
Group profit fell 0.75% to R279.1m, but Kaap Agri has opted to proceed with a final dividend, saying it expects to see recovery in some of its business lines affected by the pandemic.
After a strong first half, convenience store sales were affected by reduced footfall, as well as the inability to sell tobacco and related products, the group said.
The group’s retail and fuel operations contribute about a quarter of revenue, with Kaap Agri saying while it was seeing a recovery, this was not yet to pre-Covid-19 levels.
Excluding a 5.9% reduction in the number of transactions for retail fuel and convenience environment, the remaining business grew transactions by 2.3%, Kaap Agri said, adding it was well positioned to benefit from improving trading conditions.
While agri-input trade was the least affected by Covid-19 of all income channels, farm infrastructure projects were either halted or delayed during the lockdown, which also affected the group’s manufacturing division, which includes items such as irrigation equipment.
Kaap Agri, however, has proceeded with a 50c final dividend, a 44.4c decrease from the prior year, representing about a R37m payout to shareholders.
“Despite the challenges of a constrained consumer environment and the additional impact of Covid, business performance has been encouraging and the group has delivered results ahead of expectation under the current circumstances,” Kaap Agri said.
Kaap Agri has 217 operating sites in eight SA provinces as well as in Namibia.
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