Industrial, chemicals and logistics group KAP Industrial has advised shareholders it anticipates an even bigger slump in earnings than it had previously forecast for the year to end-June, hit by a higher effective tax rate and rising interest rates.
Headline earnings per share (HEPS) are expected to fall by 37%-47%, the diversified industrials group said on Tuesday, with headline earnings of 39.2c-46.6c per share expected for the year to end-June, lower than the 49.2c-52.1c reported in May.
The fall comes despite the group being able to grow revenue, with a moderate decline in earnings before interest, tax, depreciation and amortisation (ebitda) in the period.
Previously, it had lamented the effect of load-shedding on operations. KAP reported that lower consumer confidence also weighed on the performance of the group, which owns wood-panels manufacturer PG Bison, mattress manufacturer Restonic, trucking group Unitrans; car-seat manufacturer Feltex and plastic- and polymers-maker Safripol.
On Tuesday, it attributed the weak operational outcomes to the muted outlook for SA’s economic growth, structural changes in the local logistics industry, the loss of a major food retail contract and the resultant decline in Unitrans’s performance as dampeners to growth, adding that the trademarks and goodwill relating to Unitrans had been impaired in terms of International Financial Reporting Standards (IFRS).
“These non-cash impairments contributed to the decrease in group earnings for the year,” KAP said in a trading update ahead of its full-year results, due on August 30.
KAP Industrial, which operates in 11 Sub-Saharan African countries, told shareholders it had managed to reduce its debt levels after bringing its elevated working capital levels as of December 31 back in line with historical levels.
KAP’s share price fell 2.25% to R2.61 on Tuesday, having slumped more than 41% over the past year.
With Nico Gous.
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