Kaap Agri reported a 31% jump in quarterly earnings on Thursday but warned that load-shedding will detract from its full-year performance.
Based in Paarl, the agricultural and retail group’s products range from farming equipment and building materials to interests in grain and liquor, pet food and tyre repairs.
Recurring headline earnings for the three months to end-December rose to R170.8m, almost a third more than a year earlier, despite spending R16m on managing the ongoing nationwide power cuts, the group said in a business update.
Kaap Agri joins a growing list of JSE-listed companies that have highlighted the additional costs associated with providing backup power to keep their businesses running.
In January, the company said it was exploring the viability of rolling out renewable energy across its AgriMark branches after the firm successfully trialled two solar projects in the Western Cape.
Quarterly revenue was up 18% on a like-for-like basis and by 74% including the newly acquired PEG Retail Holdings. PEG is an independent fuel retailer with 41 service stations throughout SA operating under the Engen, Sasol, TotalEnergies, BP and Shell brands.
Kaap Agri said the acquisition of PEG will contribute an additional nine months of profitability to the group in the current financial year. The performance of its convenience and quick service restaurants has returned to pre-Covid levels and all outlets have been open during load-shedding.
Within the Agrimark grain division, the drier weather conditions in the Western Cape weighed on the 2022/2023 wheat harvest, resulting in a more normalised wheat harvest compared with the previous two record years.
The outlook for the fruit sector is stable despite lower yields, with an improvement in logistics and input costs, according to the trading statement.
“The combination of lingering high input costs, rising interest rates and load-shedding costs are having a detrimental effect on the agricultural sector,” the statement reads. “In the general and convenience retail environments, high inflation, increased interest rates and high fuel prices have led to increased pressure on consumers.”
The company’s shares were up 3.1% at R41.75 in midafternoon trade on the JSE, and have risen by 51% over the past three years.
“The market was very pleased at the resilience and strength that came out of Kaap Agri despite many other competitive retailers showing some pretty horrific numbers due to load-shedding,” said Anthony Clark of Smalltalkdaily Research.
“My take is that the trading was update was fair to good and it could have been significantly better if it did not have load-shedding.”
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