FOOD: Cash Flush Ububele May Digest Even More
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CAPE TOWN-based agri services and food supplies business Ububele Holdings looks the ‘real deal’ after posting impressive interim numbers to end December 2009 recently.
The numbers certainly suggest Ububele – which is chaired by former SA Navy officer Theo Kleinhans – has the potential to grow acquisitively and carve out a very lucrative niche in the food processing sector.
Interim figures show turnover of R295 million, which suggests annual revenues could easily top the R500 million mark at the end of June 2010. Even more impressive are the gross profits of R86 million, while bottom line more than doubled to R15.4 million.
Initially there was some scepticism over Ububele’s efforts to create sustainable wealth – which its harnessing “innovative and holistic agricultural compounds and food processing solutions in a manner that is socially responsible and environmentally sensitive”.
In layman’s terms Ububele is a ‘give’ and ‘take’ business. It supplies agricultural compounds to farmers and the uses produce from the farms to market value added foodstuffs (to supermarkets and specialist catering concerns).
While some sceptics may still roll their eyes at an operating manifesto that is peppered with PC phraseology, the truth is that Ububele has been a feisty little contender.
Kleinhans points out that Ububele has managed strong growth over the past seven years. “We started with a turnover of just R2.7 million in 2002, which we have grown to R300 million for the first six months of 2010.”
“We have exceeded shareholder expectations every year…”
Since listing on the JSE last year, Kleinhans notes that Ububele has experienced substantial increase in sales volumes in both its agriculture and food divisions.
Sales by the agriculture division topped R246 million, while sales from food services came in at R54 million.
Kleinhans points out that while the agriculture division experienced a substantial increase in sales volumes, a stronger rand negated these gains. This saw agriculture report a 4% decrease in revenue.
But the food division increased its revenues by a whopping 92%, not only thanks to the recent acquisition of dairy producer, Milkworx, but also from significant increases in sales volumes from existing operations.
Despite the variance in sales levels, the profits generated by the respective businesses were not that far apart similar with agriculture managing R8.2 million and food services R7.4 million.
Kleinhans believes Ububele can look forward to a year of further value enhancing for shareholders. “We feel that Ububele is poised to take advantage of improved market conditions and to continue the company’s growth in its respective markets.”
CBN suspects that the fat trading margins earned by Ububele’s food division could prompt further acquisitions in the food processing arena – possibly even before calendar year end.
As at the end of 2009 Ububele – which generated strong interim cash flows – held over R30 million in cash balances. That should be sufficient to pursue a few niche food-processing ventures in and around the Western Cape.
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