Modest growth for Kaap Agri, despite challenges

Kaap Agri, farming retailer and agriservices company, achieved modest growth during the financial year ending 30 September 2018. Announcing the results, Sean Walsh, CEO of Kaap Agri, said that the agricultural environment continued to be affected by economic and climatic conditions as well as policy uncertainty, but that the group still managed to deliver a good trading performance.

The company’s revenue rose 8,1% to R6,55 billion during the period under review, with growth mainly driven by a 12,1% increase in transactions numbers, and 38,5% growth in fuel volumes in The Fuel Company division, said Walsh.

However, the impact of the recent drought was evident in the company’s results, with the most serious consequence evident in the grain handling and storage business, Wesgraan. According to Graeme Sim, Kaap Agri’s financial director, Wesgraan had a particularly challenging year with its operating profit more than halving to R23,6 million from R52 million.

“This is a direct result of wheat intakes being almost 50% lower than the previous year,” he said. Recurring headline earnings grew 1,7%, while recurring headline earnings per share increased 0,7% to R354,10, resulting in a five-year compound annual growth rate of 14,1%. Kaap Agri declared a total dividend of R1,16 for the year, which was a 4,2% increase on the prior year.

Walsh added that the results demonstrated the importance of diversification.

“Despite the extensive drought, policy uncertainty, and persistent pressures on consumer spend, we experienced strong real revenue growth across all income streams.” –