KAP Industrial reduces debt, declares dividend and more than doubles earnings
KAP INDUSTRIAL Holdings, which employs about 19 000 people in a range of sectors that includes automotive components, timber and logistics, reinstated its dividend and lifted operating profit 48 percent to R2.1 billion in the year to June 30.
“We are extremely pleased with the results in what was an uncertain, unpredictable environment. We emerged with a stronger balance sheet, strong cash generation and a dividend,” chief executive Gary Chaplin said in a telephone interview on Friday.
All the companies in the group performed well, although Unitrans, which had among its operations school bus and corporate transport, was facing a tough environment, he said.
He said the strong results in the complex environment were a reflection of the value in the business model and the resilience of their people.
KAP grew revenue by 11 percent to R24bn. Headline earnings per share improved 146 percent to 43 cents. A dividend of 15c per share was declared.
Notwithstanding the good results, the share price slipped 3.7 percent to R4.43 by midday on Friday.
Nevertheless, the price has recovered strongly this past year – Thursday’s price of R4.60 per share represented an increase of 97 percent for the year.
Chaplain said the business model held aligned operations in carefully chosen sectors and markets, supplying primarily non-discretionary goods and services.
“Our management has focused on the key pillars of our strategy, being revenue growth, market differentiation and operating efficiencies, which is having a meaningful impact on enhancing shareholder and stakeholder value.”
He said there were a number of investments in process at existing operations. For the group these were higher return lower risk investments, while the group was keeping an eye out for smaller “bolt-on” acquisitions.
Strong growth in home-related consumer spend during the year had benefited the PG Bison business, which manufactures decorative wood panels, and Restonic, which manufactures sleep products.
“We experienced strong demand for our polymer products in Safripol, which was supported by increased consumer focus on health and hygiene,” said Chaplin.
KAP is also involved in automotive manufacturing, a sector that has seen significant investment commitments by international automotive manufacturers in recent years, as well as support from government through the Automotive Production Development Programme.
Although there was a strong recovery in the automotive sector, production levels remained below pre-Covid levels, and this might only recover to pre-Covid levels next year, he said.
Unitrans, which does logistics and passenger transport in 10 African countries, performed well. “Because of our involvement in businesses across several different sectors, we were able to find growth opportunities despite very tough economic conditions,” said Chaplin.
He said they expected market conditions to remain unpredictable and challenging, but they were positive and excited about KAP’s prospects.
“Demand for our products and services remains strong, and we have a solid pipeline of growth opportunities that will be implemented across the group.”
He said notwithstanding the challenging environment, R1.8bn was invested in capital expenditure for future growth and 40 million of the group’s shares were purchased.
KAP generated R3.5bn in cash from operations, an increase of 68 percent, and it reduced net interest-bearing debt by R511m.
He said there were a number of strategic initiatives under way to increase revenue, margins and returns.
The share price lost 6.09 percent to close at R4.32 on the JSE on Friday.