TWK shows mixed results for the past six months

Load-shedding and the general economic downturn had a negative impact on the performance of TWK Investments Limited during the six months ending 28 February 2023. The timber and insurance divisions of the company, however, performed well.

Although revenue increased by 7,57% to R5,25 billion, earnings before interest, tax, depreciation and amortisation (EBITDA) from continued operations decreased by 13,09% to R372,78 million. This was mainly a result of a drop in sales volumes and margins in fertiliser sales, the impact of load-shedding on operations and the diesel costs incurred to minimise the impact, and the interest rate and price inflation affecting the retail and mechanisation segment.

The fertiliser division in particular showed the effects of the difficult global market conditions. Revenue from continued operations increased by 7,57% to R5,25 billion, but EBITDA from continued operations decreased by 13,09% to R372,78 million. Basic earnings per share decreased by 20,97% to 447 cents, while net asset value per share was up by 8,84% to R54,68.

TWK CEO André Myburgh said that since October 2022, the fertiliser market had experienced, on average, a significant decrease of 45,8% in raw material fertiliser prices. “Fertiliser sales declined by 22,24% to 94,604t. Margins came under severe pressure and certain fertiliser products were sold well below cost price to ensure that stock levels were reduced.”

The timber division reported an increase of 28,66% in revenue to R1,48 billion for the period under review, due mainly to the growth in wood-chip exports and local timber sales. Revenue for the retail and mechanisation division decreased marginally (by 0,32%) to R2,59 billion.

Myburgh said while the results for the six months ending February 2023 had been disappointing, it underlined the effectiveness and importance of the diversified but focused business model.

The grain division’s revenue increased by 57,85% to R671,71 million due mainly to the robust performance by the grain marketing business. The drastic increase in maize product and animal feed prices due to the high average maize price had also contributed.

Myburgh said the impact of the high average grain prices and the inability to recover some of these costs, specifically the animal feed business, fuel and energy, had resulted in EBITDA decreasing by 48,16% to R11,29 million, with the EBITDA margin down to 1,68%.

The revenue of the financial services division revenue increased by 27,29% to R127 million, with EBITDA increasing by 35,77% to R60,72 million. The increase in EBITDA was mainly attributable to the strong performance delivered by the insurance division.