Zeder’s profits plummet

Group still seeing ‘significant supply chain constraints’.
A special dividend will be paid out in May, but the group wants to be ready to assist its portfolio companies ‘if required’. Image: Moneyweb

Agribusiness investment group Zeder has announced that it will not be pursuing new investments for the time being after the group’s full-year profits plummeted 98.8%, from R823 million in FY21 to R10 million for the year ended February 2022.

Speaking at Zeder’s year-end results presentation, CEO Johann le Roux said the company’s intention is to guide its assets to return to previous profitable levels.

Le Roux added that the group, which largely focuses on agricultural businesses as the core of its investment portfolio, is “still seeing significant supply chain constraints leading to increased costs and margin erosion”.

The financial results from its previous financial year include the increase of the total sum-of-the-parts (SOTP) value from R4.33 to R4.66 per share as a result of increased valuations of The Logistics Group (TLG) and Kaap Agri.

This increase, countered with the 20c per share special dividend, contributed towards a 12% increase for the SOTP value during the 2021/22 financial year.

However, as of April 4, the SOTP dropped to R3.62 as a result of TLG and Kaap Agri’s exit from the Zeder group.

Zeder further reported a R1.86 billion increase in cash balance due to the closing of the TLG transaction.

Special dividend

A R438 million cash balance is anticipated to remain after the May payout of the special dividend which is valued at 92.5c per share.

Commenting on the special dividend payout, Le Roux said the group is “taking a cautious conservative view” due to the continued effects of Covid-19 as well as the magnitude of Russia’s war in Ukraine.

“In terms of the remaining assets [Zaad and Capespan], we need to be ready to assist our portfolio companies if required.”

Portfolio

He further indicated Zeder’s increased interest in Zaad to R2.037 billion due to its improved performance during the Covid recovery period.

Meanwhile, Zeder’s interest in Capespan has decreased to R1.052 billion due to supply chain challenges experienced because of the pandemic.

“The inefficiencies at South African and global ports remain a major obstacle. It leads to increased costs and delays especially in the fresh fruit industry,” said Le Roux.

Read:

Commenting on its investment in Agrivision, Le Roux said it has been a difficult asset for the company, citing Zeder’s intention to exit the investment “at the appropriate time”.

The group’s interest in Agrivision has remained unchanged at R146 million.

Overall Zeder reported a 7.6% increase in its net asset value compared to its previous financial year-end.

Results as expected

Investment analyst Anthony Clark says not much in Zeder’s results “comes as a surprise”.

He believes the group’s reasons for wanting to unlock value in the highly undervalued agricultural sector, which was a reality in 2006, are now a thing of the past.

Clark says Agrivision has been “a complete unmitigated disaster” for Zeder, citing the destruction of its value over the years due to poor performance.

“Agrivision has been like a small festering pimple on Zeder’s backside for a number of years.

“All in all, there remains some upside. The swing factor to Zeder going forward is [the] eventual sale of Capespan and remaining assets inside Agrivision. Once [that] has been done, the only tenable asset is Zaad and I believe that it will be kept inside the greater PSG Group.”

Listen to Zeder CEO Johann le Roux’s interview on SAfm Market Update (or read the transcript here): 

Nondumiso Lehutso is a Moneyweb intern

COMMENTS   0

You must be signed in and an Insider Gold subscriber to comment.

SUBSCRIBE NOW SIGN IN

LATEST CURRENCIES  

USD / ZAR
GBP / ZAR
EUR / ZAR
BTC / USD

Podcasts

Instrument Details  

You do not have any portfolios, please create one here.
You do not have an alert portfolio, please create one here.
INSIDER SUBSCRIPTION APP VIDEOS RADIO / LISTEN LIVE SHOP OFFERS WEBINARS NEWSLETTERS TRENDING

Follow us: