KAP Industrial is exploring new export markets for its products in Europe as the groups fine-tunes its strategy to grow through market share gains and enter new markets.
The diversified chemicals and wood-polymer manufacturer said on Tuesday that it is taking giant strides in its energy strategy aimed at cutting electricity use, mitigating power interruptions and nonsupply, and generating its own electricity.
It is considering two projects for self-generation of electricity, mostly through renewable energy, at attractive returns.
The JSE-listed R9.6bn diversified group owns PG Bison, which manufactures wood panels; mattress manufacturer Restonic; Unitrans trucking group; car seat manufacturer Feltex; as well as plastic and polymers maker Safripol.
Speaking to Business Day after the group posted results for the six months to end-December 2022, CEO Gary Chaplin said PG Bison and Unitrans are stable and Safripol is down as expected. Restonic produced another “disappointing” performance.
KAP reported a 12% rise in revenue and a 2% fall in earnings before interest, taxes, depreciation and amortisation, alongside an 8% decline in operating profit before capital items.
Chaplin said subdued consumer demand led to lower sales volumes. Downstream market customers — including polymer sellers, retailers selling mattresses and furniture as well as the automotive industry — were affected by load-shedding more than others, hitting KAP volume sales.
“To mitigate that we are exploring new export markets that can allow us to continue to run our production and export products,” said Chaplin. “We are seeing opportunities opening up in certain European markets.
“We are re-entering those markets and pursuing some fresh opportunities in European countries that we haven’t sold to before,” said Chaplin. He would not name the countries targeted.
While the group was not affected materially by load-shedding, it said secondary effects are emerging, including additional wear and tear on equipment due to electricity instability and unscheduled stoppages with power infrastructure failures.
Having undertaken an energy strategy to reduce electricity consumption and mitigate supply interruptions last year, the group said it is considering projects to generate electricity.
It completed a 10MW photovoltaic plant at its Safripol Sasolburg site in November 2022 and initiated a 4MW photovoltaic plant at its PG Bison Boksburg site during the period.
“Embarking on an energy strategy is a growth opportunity,” said Chaplin.
The group also has growth projects expected to come to fruition in the next two years, including the R1.9bn expansion of medium-density fibreboard capacity in Mkhondo that is expected to improve global competitiveness and position the company for growth in local and export markets.
“We are also optimising our portfolio by reallocating capital internally that we believe will improve returns and unlock value for our shareholders,” said the CEO.
The share price of KAP was down 3.85% at R3.75 at the close.
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