Agribusiness specialist Crookes Brothers — which has operations spanning sugar, deciduous fruit, bananas and macadamias — declared an interim dividend of 35c per share despite profit shrivelling up due to drought.
Half-year results to the end of September released on Wednesday showed a 70% drop in profit after tax to R26.4m as the drought drove down sugar cane revenue and triggered impairments in this division’s biological asset value.
The dividend, declared from income reserves, is markedly lower than 2016’s 50c per share. Still, the payout, covered 1.3 times by headline earnings, is somewhat surprising considering Crookes’s conservative dividend policy.
The full-year payout to end-March was covered almost 8.5 times by earnings.
But the Crookes board advised against using interim results to project full-year earnings due to the effect of seasonality of crop revenues and the effect of biological asset valuations on earnings, particularly in the deciduous fruit and macadamia segments.
Crookes’s deciduous fruit operations reported a smaller loss of R18m for the interim period, but chairman John Barton projected firmer prices for the 2018 crop that is set to be harvested from January to May.
Barton said despite the precarious water supply in the Western Cape, water resources at the company’s deciduous farms in the Elgin-Grabouw-Villiersdorp area were adequately supplied from farm dams and boreholes to meet summer requirements. The core sugar division reported a 10% decrease in revenue to R240m due to lower sugar prices in SA and Zambia as well as a decrease in production stemming from the drought.
The sugar division also incurred a biological asset writedown of R44m.
In banana operations, operating profit was down 43% to R15m with Barton reporting a lag in production for the interim period due to the drought and storm damage.
Barton said production was expected to catch up over the balance of the season, adding that the annual production should compare favourably to 2016. Banana prices remained firm in SA and Mozambique following the effects of the drought, he noted.
The fledgling macadamia business in Mozambique is expecting its first significant crop in March. Revenue of R2.5m and operating profit of R2.6m was recorded by the macadamia division, reflecting mainly the first small crop of 52 tonnes dry-nut-in-shell that was harvested in the first three months of this financial year.
The Renishaw property development division generated revenue of R16.5m.
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