Zeder reels from drought, sugar tax
Agribusiness-focused Zeder Investments has warned that “challenging trading conditions” will result in a fall of as much as 93.4% in interim headline earnings per share to endAugust.
Agribusiness-focused Zeder Investments warned on Thursday that “challenging trading conditions” will result in a fall of as much as 93.4% in interim headline earnings per share share (Heps) to end-August.
Heps are expected to fall 90.8%-93.4% from the 30.3c per share in the prior comparative period.
The group, which owns 28.6% of Pioneer Foods and 41.1% of Kaap Agri, said in a statement it had seen weaker performance across most of its investees amid challenging conditions in the food and related business sectors. It did not go into details, but Kaap Agri reported in May that the recovery from drought in the Northern Cape and Western Cape has been slower than expected.
Ron Klipin of Cratos Wealth said recent results from Remgro, which owns RCL Foods, underscore the sector’s difficulties.
RCL Foods said in August it had impaired its sugar business by R750m, due to a larger-thanexpected impact from the government’s sugar tax.
The company also said it continues to face pressure on its chicken products, with international dumping still driving market oversupply, even as it faces higher feed costs.
Zeder said on Thursday attributable earnings per share will only fall between 3.7% and 7.3%, due to the upward fairvalue 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 fairvalue 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%.