70% profit drop for drought-hit Crookes Brothers

AGRICULTURAL group Crookes Brothers yesterday reported a 70.47 percent decline in profit for the six months to the end of September as the aftermath of drought hit its bottom line.

Profits declined to R26.4 million, down from R89.4m reported a year ago, driven mainly by a decrease in sugar cane revenue and a write down in the cane biological asset value, both factors resulting from the aftermath of drought conditions in sugar-producing areas.

However, the group said that it had completed its macadamia project in Mozambique and property development in Renishaw.

Revenue decreased to R412.3m, down from R452m, while operating profit came in at R43.8m, down from R123m compared with last year.

Headline earnings per share declined 87.61 percent to 47.2 cents a share.

“This is reflected in capital expenditure of R87m and a similar value of working capital, utilised in the construction of housing stock by Renishaw Property Developments, both of which were funded from existing cash and debt facilities,” the group said.

Crookes Brothers said it wanted to raise short- and medium-term debt of R200m to bring other projects into production over the next two years.

In the results, sugar cane revenue declined 9.6 percent to R240.5m, driven by a decrease in sugar prices in South Africa and Zambia, and a production decrease attributable to a decline in area under crop of 646 hectares caused by the drought.

“These factors also resulted in a biological asset write-down of R43.8m. Sugar cane operating profit decreased 49.5 percent to R67.8m,” the group said.

Deciduous fruit recorded an operating loss of R18.3m, an improvement from the R24.8m reported last year, while the banana operating profit decreased 42.8 percent to R15.1m, which Crookes Brothers attributed to the drought and early season storm damage.

Crookes Brothers expected results for the full year to reflect a recovery from the current position, with a firming of the deciduous markets and the macadamia and property projects contributing for the first time.

Crookes Brothers expects production to catch up over the balance of the season and said the annual production should compare favourably to that of last year. It also expects its first significant macadamia crop in March 2018.

The group declared a gross cash dividend of 35c a share, down from last year’s 50c.

Crookes Brothers shares close unchanged at R56 on the JSE yesterday.