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Senwes delivers ‘knockout’ annual results

Since last year there has been a run on both soft and hard commodity prices: CEO Francois Strydom.

SIMON BROWN: I’m chatting about the Senwes results. I’ve got CEO Francois Strydom on the line with year-end April results. Revenue up 57.5%, earnings per share up 72.3%, a dividend of 32 cents, and a special dividend of 26 cents. 

Francois, I appreciate your early morning time. If we look back over the last year for Senwes, obviously there’s been the pandemic. But there’ve been fires, there’ve been floods, there’ve been crop pests and all the rest happening – and yet really knockout results, I suppose helped in part by what have also been record crops. I suspect a really good effort by you and your team.

FRANCOIS STRYDOM: Thank you, Simon. Yes. I’m very impressed. The first thing is of course the food and fibre ……[0:54] value chain were classified as essential businesses. So we were blessed to be open during the whole pandemic. 

And then there was almost a perfect storm. We did a few acquisitions in the past four years that played out very nicely, and environmental conditions, as you said, were very good. And then since about last year, there was this run on the soft commodity prices, or hard commodities for that matter as well. And it’s just been going on. 

And then of course the lower interest rate. The primary producers’ interest rate came down and that was a relief of about R6 billion on their side. So lots of cash available in the market, and certainly that part of our client base is very bullish.

SIMON BROWN: This should be continuing into the current year. Certainly, the crop estimate committee is looking for maize harvest of plus-R60 million tonnes. Prices have remained fairly elevated. Interest rates are unlucky to change for the rest of this calendar year – a strong look [forward] to certainly the next six months, if not the full year to April 2022.

FRANCOIS STRYDOM: Definitely. Good rainfall conditions in both the summer and the winter rainfall areas, Simon. And if you look at the individual crops, apples and pears, citrus – we are in the middle of the citrus export season – last year 145 million cartons being exported and this year 154 [million]. So between 9% and 15% up on all different commodities, combined with good prices as China came out of the pandemic first. Now the demand from China is huge. 

As you said, good climatic conditions going into the winter. It has really been a somewhat moderate winter and we think that at least for another year these conditions should last and be favourable for companies in that value chain. 

SIMON BROWN: Looking at it, it seems, if my geography of South Africa is correct, Limpopo is the only province you’re not represented in. I hope I’m not making a fool of my geography teacher.

FRANCOIS STRYDOM: No, you are right.

SIMON BROWN: If I look at your offering, it is the full offering. It’s finance, it’s equipment, it’s grain, transport, handling marketing; you’ve got retail outlets, you’ve even got insurance. You really are the complete service to a farmer/farming community.

FRANCOIS STRYDOM: That’s correct – 360 degrees around the farmers. So it’s all inputs, the input supply channel, then it’s the market access channel. And of course, right in the middle is the financial service. We are not really a bank, but what we do is to finance our own turnover. So it means we’ve got a very substantial financial offering but focused on either dealing with the channel businesses or the market-access channel businesses. It’s a businesses that is 112 years old and certainly very well established in infrastructure around the country.

SIMON BROWN: Your retail outlets – you’ve also got some wholesale – how have they been doing? I’ve chatted with some of your competitors in the space, although perhaps a little more focused in the Western Cape. Certainly retail has been doing fairly well, as you would point out they would have been open, I imagine, during the harder lockdowns of last year.

 FRANCOIS STRYDOM: Simon, for that business January picked up. It’s up 294% from last year’s R148 million operating profit to R584 million – the wholesale. There has been quite a lot of consolidation in that space. So we were well established there and of course, benefited off that consolidation. 

And then the retail. Both the equipment businesses and the agricultural retail really pumped, and the agricultural equipment business really shot out the lights.

SIMON BROWN: That’s farmers having good crops and going and getting more equipment, updating. It’s doing well for the farmers; you make hay because there are going to be tough times again.

Francois Strydom, CEO of Senwes, with results to the year ending April 2021, I appreciate the early morning time.

Listen to Monday’s full MoneywebNOW podcast here.



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