Industrial group KAP expects its full-year earnings to be up to 52% lower due to a subdued trading environment and higher operating and finance costs.
The group said on Wednesday that it expected headline earnings per share (HEPS) for the year to end-June to be between 21.9c and 26.1c, 42%-52% lower than a year ago.
The group experienced increased operating costs relating to the start-up and ramp-up of PG Bison’s new medium-density fibreboard (MDF) line and higher finance costs, which were capitalised during the construction phase of the group’s major capital projects (including the MDF line), which were completed in the 2024 financial year.
It also reported lower vehicle production by two major original equipment manufacturers, which resulted in a weaker performance by Feltex.
“The subdued operating environment was particularly challenging during the fourth quarter of [the 2025 financial year], which further impacted the group’s operating performance,” it said.
For the 2025 financial year, the group is expected to deliver a modest growth in revenue, a decline in earnings before interest, taxes, depreciation and amortisation (ebitda) of less than 10% and a decline in operating profit before capital items of less than 15%.
In accordance with International Financial Reporting Standards (IFRS) requirements, the group conducts annual impairment assessments on all goodwill and intangible assets with indefinite useful lives, as well as on property, plant and equipment where impairment indicators exist. As a result of these assessments, intangible assets of Feltex’s aftermarket business Maxe were fully impaired, following shifts in customer and consumer behaviour in accessorising vehicles as well as noticeable shifts to alternative vehicle models.
Goodwill and intangible assets of Optix were partially impaired, following the persistent underperformance of this investment due to a more extended sales cycle and inability to expand its subscriber base resulting in revised expectations of operating profitability.
Property, plant and equipment of Safripol’s polyethylene terephthalate (PET) plant was partially impaired having experienced an extended period of lower global PET prices and margins following global oversupply. It is expected that this global cyclical low in prices and margins will continue in the medium term and show signs of improvement only from after 2030.
The current financial year reflected the start-up year of operation of the group’s major capital projects, which were expected to produce attractive returns in the medium term and had useful lives of more than 20 years, it said.
“The operational and financial effects related to the start-up and ramp-up of these projects experienced during the year are not unusual for projects of this nature and scale, are temporary and will therefore reverse over time. These projects are now fully operational and continue to offer good growth opportunities for the group over the medium term as markets are developed.
“In addition, management continues to focus on and is making meaningful progress with realising value from major projects, addressing areas of underperformance and reducing debt,” it said.
The company’s results will be released on August 28.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.