TWK’s diversified business provides good rise in earnings

TWK INVESTMENTS (TWK) has credited its diversified business model for reporting an increase in earnings for the year to end August, with basic earnings per share up by 18 percent to 434 cents a share, up from 367c compared to last year.

TWK is a diversified agriculture and forestry company listed on the the ZARX exchange on June last year.

The group operates different divisions, which are timber, retail and mechanisation, financial services, grain and vehicles and tyres.

TWK said on Friday that despite ongoing change, with numerous local and international political shocks, uncertain economic and financial conditions, extreme grain price fluctuations and gruelling droughts in certain parts of the country, revenue increased by 9.6 percent to R7.68 billion, up from R7bn compared to last year.

The group said that growth was achieved both organically and through acquisitions. This was supported by TWK’s diversified business model.

Chief executive André Myburgh said it had been satisfying to see the level of growth across all its businesses which is testimony that the business strategy does deliver results.

“This, together with improved efficiencies, resulted in a slight increase of 1.7 percent in operating profit to R331.7 million, which equated to an operating profit margin of 4.3 percent. Profit before taxation increased by 5.5 percent to R216.3m, up from R205m,” Myburgh said.

Net asset value per share increased by 9 percent to R35.98 a share.

The group declared a dividend of 75c a share, up by 25 percent compared to last year’s 65c.

Eddie Fivaz, chief financial officer, said: “The company strives for a healthy balance between borrowed and own capital and the payment of future dividends will depend on the board’s continued evaluation of TWK’s earnings, after provision is made for long-term growth, cash resources, own needs and other factors.”

The group operates in Mpumalanga, KwaZulu-Natal, Eastern Cape, Western Cape, Free State, Limpopo and Gauteng.

With the drought having negatively impacted the agricultural sector in the country, the group’s grain division bucked the trend by reporting 34.7 percent increase in earnings before interest, tax, depreciation and amortisation to R27.2m. However, revenue in the division declined by 5.2 percent to R979.9m.

The group said the grain division’s results were positively impacted by the high carry-forward stock due to the previous year’s record maize harvest.

Myburgh said South African agriculture was known for fluctuating agricultural conditions and severe droughts. “However, TWK’s business model and operations have a number of risk mitigating levers to soften challenges and risks,” he said.

He added that through its strong cash flow generation and financial position, they were well-positioned to capitalise on new opportunities.

The cash generated from operations during the period increased by a healthy 45 percent to R350m.