Western Cape Business News

Send  Share  RSS  Twitter  30 Mar 2010

FOOD & BEVERAGES: Pioneering Good Profits


Recent Western Cape Business News

MALMESBURY-based agri-business Kaap Agri can thank its 28.6% owned associate company, Pioneer Foods, for a strong profit contribution in the year to end September 2009.

Pioneer, which owns brands like Sasko and Bokomo, chipped in R176 million of Kaap-Agri’s R274 million earnings.

That means Pioneer accounted for a whopping 64% of Kaap Agri’s earnings. While it’s easy to see Pioneer as the main profit driver, Kaap Agri’s own operations put in a stout showing over what was a difficult period for agri-businesses.

Kaap Agri’s own operations managed to maintain earnings at R98 million despite turnover slipping slightly to R3.3 billion.

There appears to be some confidence in Kaap Agri’s own businesses kicking on in financial 2010 with directors opting to pump up the dividend payout by 30% to 30c/share.

Kaap Agri’s core trading division – which incorporates retail operation Agrimark and the packaging material division – saw operating profits drift down 4%.

This division, which accounts for almost 70% of Kaap Agri’s operational earnings, continued to upgrade its infrastructure and a number of Agrimark branches were revamped and upgraded.

The company also acquired six Pakmark branches in Limpopo and another one in the Langkloof as well as opening a new branch in the Northern Cape.

Kaap Agri saw growth in 2009 from its grain handling and seed divisions, which managed to increase operating profits by 20% and 22% respectively.

Kaap Agri MD Corwyn Botha said the growth in the grain and seed divisions was mainly due to markedly higher throughput at the company’s silos as well as longer storage times.

Profits at the company’s mechanical division were virtually static, while the parts and services divisions performed well.

Botha highlighted the performance of Kaap Agri’s spraying subsidiary, Agriplas, which turned a loss of R1.6 million into a profit of R3.1 million.

He said Agriplas was now properly positioned and should be able to extend its profitability going forward.

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