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FRUIT & BEVERAGES: New Look Capespan Harvests Big

 



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THE Bellville-based fruit exporting giant Capespan showed no bruises from the global economic crash at the tail-end of last year, increasing operating profit by 70% to R168 million in the financial year to end December 2008.

This is the best performance by the group since its inception in 1999.

Capespan MD Neil Oosthuizen said the group’s Fruit Division scored from a strong performance from SA exports and the inclusion (for the first time) of operating income generated from farm management activities.

Capespan markets fruit globally into 60 countries worldwide with around 35% of all fruit marketed grown in SA and the balance sourced from about 40 other countries.

The group’s (largely unsung) Logistics Division also posted a strong performance in all its subsidiaries, with Oosthuizen reporting that the port terminals saw a significant increase in citrus volumes and containers handled.

Capespan’s income statement showed that revenue increased 13% to R2.4 billion with a much improved trading margin of 5.8% (2007: 4.6%) ensuring the commendable growth in operating profit margin.

Capespan also got a small boost from its associate company interests, where the contribution jumped 23% to R28 million.

Oosthuizen said associate profits increased thanks to a solid performance by the group’s Hong Kong operation and improved results from farming and wine interests.

The main performance driver was the Fruit Division where revenue rose because of higher market prices and a weaker rand against major trading currencies.

Capespan’s strong performance coincided with the group’s long awaited shareholding restructuring via a share buy-back.

Almost 100 million shares were bought back, of which almost 76 million were cancelled to leave 331 million shares in issue.

Capespan (Pty) Ltd holds just less than 10% of the issued shares. Total Produce Plc is the biggest Capespan shareholder with 11.5%.

Prior to the restructuring the bulk of the Capespan shares were held by Outspan and Unifruco, whose operating assets were merged to form Capespan in 1999. Outspan and Unifruco are now being voluntarily wound-up. The strong results give credence to directors earlier claims that by simplifying the shareholding and implementing the future structure would lead to new opportunities.

And new-look Capespan might have built up considerable goodwill in the fruit farming community with an admission that the group was able to increase payments to South African suppliers on average by between 23% to 46% depending on the fruit kind during financial 2008.

But Oosthuizen did caution that Capespan was exposed to the global environment. “We are aware of the enormity of the financial crisis facing the world and all the final impacts of it are not yet known.”

He said the liquidity and credit crises would impact on Capespan’s markets and customers in different ways. “We will have to remain flexible and adjust to the changing demand patterns and pricing structures.”

The bottom line, according to Oosthuizen, was that Capespan’s profits in 2009 would be under pressure.


 
 
 
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