Western Cape Business News

Send  Share  RSS  Twitter  26 May 2011

FOOD & BEVERAGES: New Flavour At Fresher Capespan


Recent Western Cape Business News

JOHAN Dique quietly took the reins at Bellville-based fruit exporting giant Capespan earlier this year.

But the lack of fanfare around the Dique’s appointment as CEO – replacing Neil Oosthuizen – should perhaps not be interpreted as sign that business at Capespan will continue as usual.

The first thing that strikes CBN about the appointment of Dique is that he is not a fruit industry insider. Industry insiders reckon Dique’s appointment is a refreshing change, and may well mean a change in strategic tack.

But Dique is not entirely green when it comes to agri-businesses. He served as the CEO of Senwes for almost a decade, where he earned a reputation as a turnaround specialist.

When Dique joined Senwes in late 2001 the company was undergoing (to put it politely) a fair bit of financial trauma and not the stout agri-business we see today. Basically Dique took Senwes from an all-time low to delivering the best profit performance in the 100-year history of the company in 2009.

Former Capespan marketing executive Fred Meintjies - in an article in Fruit Logistica 2011 – noted Dique’s appointment came at a time when the company was entering the final phase of its restructuring based on a new strategy to meet producer and market requirements.

Meintjies said: “The changes affect mainly the SA operations, where activities now to a great degree have been centralised within the Capespan Fruit Division. What was previously known as Capespan Exports, the logistics and procurement operation, is now being phased out. Logistics, including the previously independent logistics service operation, the Fresh Chain, has been incorporated into the Fruit Division.”

One thing Dique has at Capespan - setting aside the inconsistent profit performances over the last decade - that he never had when he started his tenure at Senwes is a decent financial base from which to work.

Results for the year to end December show that Capespan still holds a strong balance sheet – strong enough to pay a generous final dividend of 8.5c/share.

The company holds equity of some R827 million on its balance sheet with current assets covering current liabilities by a reassuring margin of some R170 million.

What was also extremely encouraging in the year to end December was Capespan’s strong second half performance after an iffy interim period.

While turnover crept up 1.7% to R2.7 billion, Capespan kept a lid on costs (and was helped by a R20 million boost in other income) to almost double gross profits to R112 million.

Despite a sizeable drop in financial income (interest earned on Capespan’s cash balances) from R75 million to R48 million, the company still managed to post net profit of R74 million - well ahead of the previous year’s R56 million.

While one might fret about the lack of growth in Capespan’s revenue, there is the strong rand to factor in. Directors point out that the fruit division was a star performer with its revenue rising 9%, and that on a like-for-like basis (using the 2009 average exchange rates) Capespan’s revenue growth would actually have been 6.4% higher.

The biggest pull on revenue was the Logistical side, which saw a substantial decline in business in Universal Reefers. But revenue in FPT increased due to the increase in the volumes of fruit, bulk and break bulk cargoes and the number of containers handled.

Looking ahead, things look promising with directors pointing out that the Southern Hemisphere’s deciduous fruit season got off to a slow start in both South Africa and Chile which caused an undersupply in certain key markets.

But while this meant increased pricing, the Rand continued to appreciate and was on average 8.2% stronger during the first two months of the new financial year compared with the previous year.

Still, Capespan has completed its restructuring in the Fruit Division and will hopefully benefit from the lower cost base in 2011.

Perhaps more interesting – in light of the change of guard - is that directors reiterate Capespan will continue to pursue a strategy of acquisitive growth.

Readers will remember from previous articles Capespan’s deal to snatch 25% of Golden Wing Mau in China. Directors reckon: “The group is investigating various acquisitions in the Logistical Division which will allow for further diversification.”

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