Kaap Agri looks into more solar as load-shedding intensifies

Confident it remains well positioned for further growth, agriculture and fuel-related retail group Kaap Agri is exploring the viability of rolling out renewable energy across its AgriMark branches after the firm successfully trialled two solar projects in the Western Cape for R1.6m apiece.

In recent years Kaap Agri has expanded its use of renewable energy to achieve greater energy efficiency, enhance customer experience, manage rampant electricity costs and erratic supply, and foster a greener mindset across its operations.

The group installed solar photovoltaic (PV) panels on the roofs of its two largest Agrimark branches in Paarl and Worcester for small-scale embedded power generation.

As a result, its solar energy trials not only allowed branches to remain open during load-shedding, but the installations also resulted in savings of R368,558 from October 2021 to September 2022 at Agrimark Worcester and R282,561 in Paarl.

Now the Western Cape-based company is considering the use of solar power across its branch network.

“Due to the increasing cost of electricity and continued load-shedding, we are exploring the feasibility of a further rollout across the branch network,” the group said in its annual integrated report.

“We are also considering a major installation at the Agriplas manufacturing facility,” Kaap Agri said.

With more than 70 outlets in SA and Namibia, Agrimark’s offerings range from grain and liquor to pet food and tyre repair. In line with its digital transformation strategic objectives, the company launched its first online store in 2022 which is housed under the Agrimark brand.

The R3.1bn JSE-listed group said there has also been a drive across the Kaap Agri business to replace standard light bulbs with LED equivalents and standard air-conditioning units with water-cooling units.

The initial reports indicate a reduction in energy utilisation, it said.

Despite the rising cost of energy in the business, through its 100%  shareholding in PEG Retail Holdings, Kaap indirectly benefited from intensified load-shedding.

PEG, an independent fuel retailer with 41 service stations throughout SA, operates under the Engen, Sasol, TotalEnergies, BP and Shell brands.

It reported an average of 83,000 litres of fuel were used per month in its 2022 financial year, compared with an average of 76,000 litres for the same period previously.

The company said there was an increase of 9.21% in fuel consumption year on year and the increase “can be attributed to more fuel usage due to load-shedding”.

Despite grappling with high inflation, load-shedding and economic pressure the group’s core business saw revenue up 48.4% in 2022, though manufacturing profitability remained under pressure.

Agrimark, Agrimark Grain, and Retail Fuel & Convenience generate more than 98% of the group’s income.

Having paid R144.3m to the SA Revenue Service in direct taxes in 2022 the group, which has successfully diversified to include manufacturing and retail offerings in the fuel and convenience sectors, declared R110.5m to shareholders in the same period.

“We believe the strategy of diversifying the company’s market, geography and customer exposure continues to pay dividends,” Kaap Agri said.

Acknowledging that the economy is under pressure, the group said it is on track to achieve growth in line with the medium-term targets and is “optimistic” about the future as the agriculture conditions in the areas it operates are stable, and the outlook remains positive.

Kaap Agri’s share price was down 0.45% to R42.11 on Thursday.

gumedemi@businesslive.co.za