Kaap Agri, the agricultural retail services group, increased revenue 73.8% in the first quarter of its 2023 financial year, CEO Sean Walsh said in a voluntary update released yesterday at its annual meeting.
The share price was trading 3.1% higher at R41.75 on the JSE yesterday afternoon.
On a like-for-like basis, excluding newly acquired PEG Retail Holdings, revenue increased 17.8% compared to the first three months of the prior year, due to slow retail and agri performance, while inflation was at 26%, and at 12.5% when excluding the impact of fuel price inflation.
Transaction growth was at 6.3% and increased by 193.6% when including PEG. Gross profit growth was below turnover growth, largely due to fuel price inflation and lower fuel price opportunity profits realised, said Walsh.
Total group fuel litres sold grew by 82.9%, or 3.2% excluding PEG, a good performance considering the fuel volume decreases experienced in the wider fuel industry, he said.
Excluding PEG, retail-related revenue grew by 7.5% and agri-related revenue grew by 7.2%.
Fuel litre growth in PEG was under pressure, but convenience retail sales had outperformed all expectations.
In the Agrimark Grain division, drier weather in the Western Cape weighed on the wheat harvest, resulting in a more normalised harvest compared to the previous two record years. Full-year profitability would likely be more aligned to prior years with similar wheat yields.
Earnings and headline earnings for the quarter grew by 35.6% to R170.8 million. Recurring headline earnings (RHE) grew by 30.9% to R170.8m. RHE per share increased by 19.8% to 215.27 cents (6.5% excluding PEG).
The fruit sector outlook was stable despite lower yields, with an improvement in logistics and input costs. Wine grape harvests were expected to be lower, but prices were better. Lower wheat, canola and barley harvests were currently in storage.
“The combination of lingering high input costs, rising interest rates and load shedding costs are having a detrimental effect on the agricultural sector,” Walsh said.
Agrimark Online, launched in September 2022, was gathering momentum.
Load shedding would impact full-year profitability negatively. However, certain operational interventions were being implemented.
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