KAL Group is well-positioned for a strong performance over the next twelve months, supported by a streamlined balance sheet, low debt levels, and disciplined capital expenditure management. These factors have laid a solid foundation for expansion, with new fuel and retail sites in the pipeline, aimed at boosting trading momentum.
Announcing the group’s year-end results as at September 2024, CEO Sean Walsh highlighted KAL Group’s strong cash management and the declaration of an unchanged dividend of 180.00 cents per share. “Our cash flow remains robust, and our debt is at its lowest in a decade, positioning us well for accelerated future growth, ahead of plan,” Walsh stated.
Despite a 3.0% decline in revenue to R21.73 billion, KAL Group recorded a 1.9% increase in gross profit, reflecting its focus on merchandising for profit efforts and growth in retail mix. Expenditure was kept to a moderate 4.5% increase, with savings from reduced load shedding contributing R36.0 million. EBITDA decreased by 4.4% to R859.3 million.
Looking ahead, Walsh emphasised the group’s growth strategy, with five high-quality new fuel and retail sites already in the pipeline. “We are excited about our expansion plans, which align with our 2030 strategy and focus on high-growth areas,” he said.
Agricultural conditions, critical to KAL Group’s Agrimark divisions, are also showing signs of improvement after a challenging year.
“Especially high interest rates had a noticeable impact on spending by farmers. Total SA farm debt amounted to about R260 billion as at the end of July 2024, which attracted an additional 4% interest in the last year. This cost farmers R10 billion in interest payments which were not there two years ago,” Walsh commented.
Whilst producer cashflow pressure was evident during the period, steady cost decreases in key agricultural inputs, combined with the expected further reduction in interest rates, bode well for the year ahead.
Although high levels of rainfall were recorded during the wheat season, this led to challenges around fertilising and pest control in key areas. Across the total Swartland region, a below average wheat yield and a lower canola harvest are expected. Although always weather dependent, the outlook for fruit and vegetable production in the upcoming agricultural season looks encouraging.
Both the Agrimark and TFC segments have shown resilience, with TFC achieving a 1.8% increase in profit before tax despite challenging market conditions, whilst Agrimark continues to perform well in its core sectors, focusing on market share gains.
KAL Group remains confident that improved agricultural conditions, combined with lower fuel prices and anticipated economic recovery, will drive better trading performance in the year ahead.
“Lower fuel prices are already injecting roughly R8.5 billion per month into the economy at current levels. The improved outlook for GDP growth, bolstered by energy stability and greater political certainty, will impact business and consumer confidence positively,” Walsh added.
“Our strong financial foundation will enable us to seize these opportunities and continue our drive to deliver sustainable returns for all stakeholders.”