KAL group first-half earnings rise 7%

Agriculture, fuel and manufacturing company KAL Group, formerly Kaap Agri, has reported a 7% rise in headline earnings for the first half.

The group attributed the performance to increased distribution centre throughput, fuel price gains realised, a larger contribution of convenience retail as well as higher rebates received.

Headline earnings per share (HEPS) for the six months ended March rose to 408.74c, up 7.3%. An interim dividend of 54c per share was declared compared with 50c per share a year ago.

Revenue declined slightly to R12.06bn from R12.09bn while profit for the period rose to R325.06m from R300.96m a year ago.

The group said the first six months of the financial year continued to be dominated by poor economic conditions and subdued growth.

While stubborn inflation and continued high interest rates negatively affected already struggling consumers, on a positive note the negative effect of load-shedding on business and consumers reduced.

Revenue pressure was evident across the general retail and agricultural channels during the first half, but the second quarter of the financial year improved significantly across all business units compared with the first quarter.

“Encouragingly, though the building material sector remained subdued, our various building material categories largely outperformed the sector. Revenue growth in The Fuel Company channel was bolstered by fuel price increases. Manufacturing revenue growth increased as farm infrastructural spend improved,” it said.

While overall agricultural input costs have reduced off the back of lower fertiliser costs, logistical challenges, specifically port operations, remain a major concern.

General retail performance continues to be sluggish and is expected to remain so while high inflation and interest rates persist. Convenience retail growth has slowed as load-shedding reduced, however this channel remains more resilient than general retail.

“Given that certain convenience channels are under pressure while others are performing well, it is clear that convenience customers are looking for value for money offerings,” it said.

In its outlook the group highlighted sluggish economic growth, the May 29 elections, the ongoing affect of the Russian-Ukraine conflict and the flare up of hostilities in the Middle East as risks.

“The first six months earnings will continue to contribute more to full-year earnings than the second six months. KAL remains resilient and management is focused on controllable factors in pursuit of our medium-term strategic objectives,” it said.

In early trade on the JSE, the company’s shares were 1.35% higher at R43.60.

mackenziej@arena.africa