KAL Group delivers as promised

Strong second-half upswing reflects phenomenal full-year financial performance, as forecasted, resulting in increased dividend.

KAL Group, the unique South African agri, fuel & convenience speciality retailer listed on the JSE, today reported an outstanding set of financial results for the year ended 30 September 2025, marked by an exceptional recovery during the second six months of the year.

Sean Walsh, CEO of KAL Group, said that the turnaround was achieved in a challenging economic environment, despite interest rate reductions and lower inflation.

“At mid-year, we spoke about the momentum building in our business and the uplift we expected in the second half – and we have delivered exactly that,” said Walsh. “The recovery we anticipated has materialised, with a strong upswing across our operations supporting an exceptional full-year performance.”

He added that significant improvements in key financial indicators bode well for the year ahead.

Financial results highlights

With debt levels at their lowest in 15 years, excellent margin management, and working capital and operating expenditure well managed, gross profit increased by 3.9%.

This translated into a significant improvement in headline earnings, also evidence of the extraordinary recovery: Headline earnings increased by 9.5% and recurring headline earnings increased by 10.1%. 

“Headline earnings per share of 620.98 increased by 10.6%, while recurring headline earnings per share (RHEPS) of 624.47 cents rose by 11.2%, a sharp rebound from the RHEPS 3.6% decline reported at mid-year and indicative of the strong recovery for the Group.”

Return on invested capital (ROIC) – a long-standing key metric for the Group given that it is more reliable and less volatile than turnover due to the fluctuation in the fuel price – increased from 12.6% to 13.2% and EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) increased by 13.8%.

Net-interest-bearing debt was reduced by R436.3 million, while R268.2 million in term debt was settled in the past year alone which improved our debt-to-equity ratio to 38.1%, the lowest in more than a decade,” said Walsh.

Return-on-equity increased to 14.1%, up from 13.9% in 2024.

The Group declared a total dividend of 210 cents per share for the year, an increase of 16.7% - in line with the Group’s earlier commitment and a clear signal of value delivered to investors during the year.

Delivering against strategic ambitions

Walsh said that this year’s results indicate that the Group is on track to deliver on its 2030 strategic ambitions, which includes delivering a return on invested capital (ROIC) of 14% and a return on equity of 15%, while maintaining an average debt-to-equity ratio of 40% and improving dividend payments.

Today, KAL Group is a national player with a diverse network of 268 sites – including retail stores, fuel service stations, convenience shops and branded quick-service restaurants – strategically located across rural communities, peri-urban areas and major highway routes. These sites are operated through the Group’s two core business segments, Agrimark Operations and PEG Retail Operations, which together anchor KAL Group’s presence in all nine provinces of South Africa and Namibia.

During the year, PEG – the Group’s retail fuel & convenience arm – added 3 new service stations, completed 10 revamps and added 15 retail touchpoints. Agrimark (the Group’s agricultural & lifestyle retail business) added 1 new store and revamped another. In 2026, the Group aims to expand with 10 new, revamped or upgraded PEG sites, Agrimark stores as well as Agrimark fuel sites.

“Our capital expenditure is expected to double next year as we accelerate our expansion strategy,” said Walsh, noting that during the year the Group scaled back acquisitions to progress on its goal to exit its manufacturing sector through the sale of Tego Plastics and Agriplas. “The sale of Tego and Agriplas puts us firmly in a position to unlock future value through our main operations and core growth drivers, Agrimark and PEG.”

The disposal of Tego was concluded effective 30 September 2025 and the Agriplas disposal is expected to be completed in the first half of our 2026 financial year.   

Outlook against sector performance and operating environment

“Agricultural performance remained strong across all major categories, with growth in the agri-input channel driving trading profit up 8.1%,” Walsh said.

He explained that farmers have been performing well. “With interest rates coming down, there is renewed activity in the market, even a 1% reduction on the country’s R250 billion farm debt translates to R2.5 billion saved on interest, much of which goes straight back into the economy.”

He added that the favourable and positive performance in agriculture during the year bodes well for increased farm infrastructure spend: Apples and pears had a stable year, while stone fruit and table grape harvests improved, and wine production was excellent. The citrus sector hit record export volumes of over 200 million cartons during 2025. The Group also handled approximately 18% more wheat into its silos than the previous year.

Looking ahead, conditions are favourable for an above-average 2025/26 grain harvest. “We have invested in increased grain storage capacity, which will become operational in 2026.

“The only agricultural subsector of concern is livestock, due to ongoing Foot-and-Mouth Disease (FMD) outbreaks, though exposure to the Group remains low.”

On the fuel and convenience side, Agrimark fuel litre volumes, largely focused on the agri channel, grew by 3.7%, while Group fuel volumes were up 0.8% for the year. “We expect retail fuel volumes to increase in the year ahead, supported by lower fuel prices and robust convenience retail and QSR performance. New fuel sites launched in 2025, and those planned for 2026 across PEG and Agrimark, are also expected to positively impact Group fuel volumes,” Walsh said.

Undervalued share price points to upside potential

As at 30 September 2025 the Net Asset Value (NAV) of the business was R48.71.

“Our price-to-book ratio has improved from 0.8 to 0.9 since half-year, but management is of the view that the market still undervalues the business based on the historic NAV, highlighting the opportunity for investors,” concluded Walsh.