Zeder, with investments across the agribusiness spectrum, benefited from a better climatic cycle in the year to February 28, but the macro-economic environment in which the group operates remains constrained.
However, CEO Johann le Roux said they were well positioned with a stable balance sheet and strong cash resources, despite the uncertainty and volatility of the world markets that was likely to continue in the short to medium term, a trend driven by rising inflation, higher interest rates, risks to energy availability and supply chain constraints.
Taking a cautious view and considering the amount of unrestricted cash available, no dividend was declared as part of the year-end results.
Le Roux said in a telephone interview that if there’ were no further portfolio requirements, further special dividends might be considered during the current year.
This follows the disposal of Zeder’s interest in Agrivision Africa for R160 million, the unbundling of Zeder’s 42.2% interest in Kaap Agri and the disposal of its interest in The Logistics Group (TLG) for R1.57 billion.
“Zeder's share price was trading at R4.23 per share as at February 28, 2019. Since then, Zeder returned R4.56 per share to Zeder shareholders, by way of special dividends of R3.53 per share and an additional R1.03 per share for the KAL Group unbundling, whilst still retaining a Zeder share at the closing market price of R1.72 per share and with a SOTP (sum-of-the-parts) value per share of R2.60, as at February 28, 2023.
“The corporate actions resulted in an amount of R2.06 per share returned to Zeder shareholders and therefore directly resulting in a smaller Zeder business,” he said.
Although a strategic review was under way, Zeder's objective was to maximise long-term wealth for its shareholders with the focus on growing its remaining investee companies Zaad and Capespan, he said.
In the past year supply chain bottlenecks resulted in increased costs and margin pressure due to the lagging impact of Covid-19.
In addition, load shedding and political instability were felt by most portfolio companies with operational disruptions and financial implications, said Le Roux.
He said load shedding was a pressing issue for Zeder’s investment portfolio and on the country’s business environment and outlook. It was a particular problem for farmers because, for instance, biological crops were damaged through irrigation systems being inoperable during load shedding.
Load shedding resulted in higher costs to maintain standard operations. It would have a minimal impact at Zeder and portfolio company head offices, but it had a negative impact on irrigation systems, cold storage facilities and other farming-related activities, on agribusiness, and on the farmer clients in the sectors where the group operates, he said.
He said an El Nino weather phenomena was predicted for the Western Cape, which typically led to dryer weather, and dam levels would be watched through the winter rain season.
Capespan is a vertically integrated, diversified fruit producer with global marketing and sales capabilities servicing growers and customers in key international markets.
Despite challenging conditions in the global fresh fruit industry, Capespan’s recurring headline earnings of R89m for its financial year to December 31 increased 65% from the prior year.
The global industry continued to experience difficulties on the input cost and supply chain side of operations. Increased shipping rates and other logistical challenges hampered operations during the year.
Capespan’s fruit division grew its volumes across all three core product categories and across all regions. Further growth in this division was anticipated on the back of enhanced service levels and competitive market returns to growers.
Zaad invests and operates in the specialised agri-inputs industry with a focus on emerging markets, especially Africa, the Middle East and Eastern Europe. It owns, develops, imports and distributes a range of agricultural seeds and chemicals.
Zaad reported recurring headline earnings of R124m for the six months to December 31, an 11% decrease from the corresponding prior period.
This was off the back of good performances from Agricol, FarmAg (agro-chemicals) and May Seed (Türkiye), while the results of Bakker, the African maize operations and EA Seeds were below expectations.
Agricol reported its best six months in history, largely as a result of price increases in the oilseed industry due to the Russian-Ukrainian conflict.
“South African farmers are benefiting from the low international supply, and sunflower seed shortages are also supporting local canola and soybean oilseed crop prices. FarmAg achieved growth in the local market and supply from China and India has normalised.”
Bakker Brothers, based in the Netherlands, was transitioning towards a fully-fledged IP research and development company, which results in establishing new sales channels.