A harvest of farmer results for JSE watchers
The health of SA’s farmers will be in focus, with results from Kaap Agri and egg producer Quantum, along with October’s PPI
How badly the Western Cape’s drought has hurt JSE-listed food producers remains in focus on Thursday, with Kaap Agri and Quantum Foods releasing results.
Another health check on SA’s farms will also be provided when Statistics SA releases October’s producer price index (PPI) at 11.30am.
Farm and factory gate inflation, as measured by the annual change in PPI, is expected to have accelerated slightly to 6.3% in October from 6.2% in September.
On Wednesday Crookes Brothers’ share price fell 6.7% to R42 after it opted not to pay an interim dividend for the first half of its 2019 financial year. The agricultural group paid a 35c dividend in the matching period, but halted dividends in the second half of its 2018 financial year.
Crookes Brothers reported that its deciduous fruits division fell into an operating loss of R8.3m from a profit of R1.7m.
“The Western Cape has experienced debilitating drought conditions and results in the deciduous operations reflect the resultant poor yields and quality of the crop,” Crookes Brothers said.
Kaap Agri said it expected to report a slightly above zero growth in recurring headline earnings (RHE) for the year to end-September, notwithstanding the severe drought in the Western Cape.
“Despite the estimated 11.3% drought-related negative impact on RHE growth for the year from predominantly the Wesgraan and Agri-Retail divisions, the group expects RHE for the full year to be between R249.2m and R251.7m, representing an increase of between 0.5% and 1.5% from the previous year, on a statutory basis, with all divisions, except Wesgraan, performing well,” Kaap Agri said in a voluntary trading update on November 14.
“Non-agri retail sales performance has been subdued during the second half of the year due to continued consumer pressure and the overall anticipated improvement during this period did not materialise.”
Egg producer Quantum Foods expects to report that it more than tripled its headline earnings per share (HEPS) for the year to end-September, it said on October 31.
Quantum said profit was boosted by “continued high levels of profitability in the egg business, although margins declined with an increase in feed costs and a decline in egg prices”.
It received R22m from insurers for its losses from bird flu in 2017. An improved contribution from its other African operations also boosted earnings.
“The operating environment during the first six months of the 2018 financial year again proved how quickly agricultural cycles can change,” Quantum said in its interim results statement in May.
“Two main factors influenced the macro environment during the reporting period; firstly, the consequences of the highly pathogenic avian influenza outbreak of 2017 and, secondly, the lower raw material costs following the decline in maize and soybean meal prices due to the record maize harvest in the previous season and a stronger rand.”
Platinum miner Lonmin is scheduled to release its 2018 financial year results on Thursday, possibly its last before becoming part of Sibanye-Stillwater.
The Reserve Bank is scheduled to release October’s money supply and credit extension figures at 8am.
Investec Bank economist Kamilla Kaplan forecast private sector credit extension to have increased at a slightly higher rate of 6.5% in October versus 6.3% in September.
“It is likely that corporate credit growth could slow in the fourth quarter of 2018, in view of depressed business confidence, which is expected to manifest in reduced rates of private investment, and so the demand for credit,” Kaplan wrote in her weekly note e-mailed on Friday.
“Household credit growth is likely to be restrained by high levels of indebtedness and elevated unemployment whilst the improvement in consumer confidence in the first and second quarters has not yet translated into sustained increased levels of consumption.”
US Federal Reserve chair Jerome Powell’s “dovish” presentation on Wednesday night helped the rand strengthen overnight to trade at R13.76/$, R15.66/€ and R17.67/£ at 6.30am.
Asian markets were mixed, with the Hang Seng index down 1.13% — dragged down by Naspers’s major asset, Tencent, falling 0.25% to HK$314 — while Sydney’s ASX 200 index was up 0.45%, with BHP rising 1.1% to A$30.93.