Agribusiness-focused investment holding company Zeder, which has been making headway in its strategic disposal programme, has reported an interim loss as volatile weather patterns and lower soft commodity prices hammer the industry.
The group reported a R77m loss before tax from ongoing activities for the six months ended August, compared with a R51m profit in the previous comparable period.
The company reported a loss of 4.1c for headline and attributable earnings per share, compared with headline and attributable earnings per share of 3.6c a year ago, ascribing adjustments to the valuation of the unlisted interests as the primary cause.
Based on internal appraisals for unlisted interests, Zeder’s sum of the parts value per share dropped from R2.48 per share on February 29 2024, to R2.15 per share, it said.
“The decrease is mainly as a result of the payment of ad hoc special dividends of 30c per share and the adjustments to the valuation of the unlisted investments during the period under review,” Zeder said.
“The macro environment in which Zeder and its portfolio companies operate remained relatively constrained during the period under review, mainly due to volatile weather patterns and lower soft commodity prices.”
Zeder reported a fair value loss of R83m in respect of its investment in Zaad. It said this was mainly due to the decrease in the valuation of the African operations in Zimbabwe and to a lesser extent the current challenges in the chemicals industry.
The group, with a R3bn market cap on the JSE, is organised into two reportable segments, representing the major investments of the group, namely Zaad and Pome Investments, operating mainly in SA though it does have exposure outside SA.
Noting that the Agbiz agribusinesses confidence index fell during the second quarter of 2024, but has since rebounded by 10 points to 48, the group said it was still below the neutral-point threshold. Zeder said the improvement could be ascribed to the newfound confidence surrounding the formation of the government of national unity.
The board, chaired by Chris Otto, decided not to declare a dividend, saying it would consider declaring special dividends as proceeds from its disposals were received.
In line with Zeder’s strategic review and in response to its assessment of the approaches it received regarding different portfolio assets, the Stellenbosch-based investor in the broad agribusiness and related industries has sealed deals for several disposals.
In June and July, Zeder, through its indirect subsidiaries Pome Investments and Capespan Agri, entered agreements with different third parties to sell the two farming production units of TWK and the large deciduous fruit producer Applethwaite, as well as the Novo fruit packhouse operation.
Zeder Financial Services holds 87.1% of the issued shares in Pome Investments, which holds 100% of the issued shares in Capespan Agri. In addition, Capespan Agri agreed to dispose of the smaller primary farming production unit known as Misty Cliffs.
The total disposal consideration for the transactions is R713m, with Zeder’s 87.17% accounting for R621m.
The group flagged that it has had several approaches from third parties regarding Zaad Holdings.
It said the overall state of the business environment remained depressing for SA agribusiness amid the drought conditions brought on by the El Niño weather trend, adding that it expected the markets it worked in to remain unpredictable and volatile for the foreseeable and intermediate future.
It highlighted that geopolitical concerns, port inefficiencies, inadequate rail and road infrastructure, declining municipal service delivery, and uncertainty about long-term energy availability compounded the situation.
Despite these challenges, Zeder remained well positioned with a stable balance sheet and cash resources, the company said.
Zeder’s share price closed down 3% at R1.94 on Friday, after gaining 14% in the past six months.
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