Zeder cites tough trading conditions as earnings fall

Agribusiness-focused Zeder Investments warned on Thursday that “challenging trading conditions” will result in as much as a 93.4% fall in interim headline earnings per share share (HEPS) to end-August.

HEPS are expected to fall 90.8%-93.4% when compared to the 30.3c per share in the prior comparative period, the group said in a statement.

The group, which owns 28.6% of Pioneer Foods and 41.1% of Kaap Agri, said it had seen weaker performance across most of its investees amid challenging conditions in the food and related business sectors. The company did not go into details, but Kaap Agri reported in May that the recovery from drought conditions in the Northern Cape and Western Cape has been slower than anticipated.

Ron Klipin of Cratos Wealth said recent results from Remgro, which owns RCL Foods, underscore the difficulties in the sector.

RCL Foods said in August that it had impaired its sugar business by R750m, due to a larger-than-expected impact from the government’s sugar tax. The company also said that it continues to face pressure on its chicken products, with international dumping still driving marker oversupply, even as it faces higher feed costs.

Zeder said on Thursday attributable earnings per share will only fall by between 3.7% and 7.3%, due to the upward fair-value adjustment in its investment in Joy Wing Mau in the previous comparative period.

Zeder’s subsidiary Capespan disposed of its 9.23% interest in Joy Wing Mau, one of China’s largest fruit distributors, for almost R1.2bn in September 2018.

In the company’s year to end-February, Capespan reported a significant headline profit of R317.3m, largely due to the fair-value gain on the investment in Joy Wing Mau.

At 9.10am on Thursday, Zeder’s share price had fallen 0.22% to R4.64, paring its year-to-date gain to 3.8%.

gernetzkyk@businesslive.co.za