Zeder takes slump on chin, anticipates recovery

ZEDER Investments, the JSElisted investment holding company with a specific focus on the agri, food and beverage sectors, reported a 9.5 percent decline in its sum-of-the-parts (SOTP) value to R7.72 a share for the six months to end-August.

The group said this was as a result of its investments in the agricultural sector which bore the brunt of the severe drought in 2015 but has since shown signs of a recovery following the good rains experienced in the last summer season.

The SOTP value is calculated using the quoted market prices for all JSE-listed investments, and market-related valuations for unlisted investments.

Zeder said its 27.1 percent interest in Pioneer Foods, which remains its largest investment, also experienced a period with weaker earnings for the six months to endMarch.

Pioneer Foods reported a 47 percent drop in adjusted headline earnings in its interim results for the six months to end-March as the worst drought in over 30 years weighed on the farming sector.

Chief executive Norman Celliers said lower results were anticipated as a result of the drought. “Pioneer Foods faced difficult trading conditions during the period to March this year in part due to factors that are unlikely to reoccur,” Celliers said.

“While these results were previously reported for Pioneer, the numbers are only now reflected in Zeder’s results.”

Celliers said the recovery was on the cards, however, and there were signs of improvement in the agricultural sector.

“The drought has been broken and we hope the Western Cape will have more rains. We are a diversified group and we can be optimistic about other investments, even though Pioneer has been under pressure.”

Celliers said Zeder and its portfolio companies were well positioned for recovery in the underlying trading environment. He said the companies had been strengthened in recent times and are much more resilient.

Zeder’s other investments include a 98.1 percent stake in Capespan, 91.4 percent in Zaad Holdings, 39.8 percent in Kaap Agri, 55.6 percent in Agrivision Africa and 26.7 percent in Quantum Foods.

Zeder reported a slight decline in revenue to R4.4 billion, down from R4.9bn, while total income rose to R187 million, up from R162m. Headline earnings per share (Heps) declined 69.93 percent to 4.3c a share from 14.3c for the same period last year.

The group said the earnings growth from Kaap Agri and Quantum Foods were offset by declines from Pioneer Foods, Capespan, Zaad and Agrivision.

Zeder believes that, despite the inevitable cyclical nature, investing in the agribusiness industry should offer attractive long-term returns.

The board did not declare a dividend, as it is the company’s policy to declare a final dividend only at year-end.

Zeder shares rose 0.34 percent yesterday to close at R5.90.