KAP flags lower annual earnings ahead amid challenging trading conditions
INDUSTRIAL
Unitrans completed a major organisational redesign in November 2024
Image: File
KAP, the group with industrial, chemical and logistics divisions, on Tuesday warned that it expects lower earnings for 2025 amid challenging trading conditions.
Earnings per share (eps) is expected to decrease by more than 30% for 2025, which is a decrease of at least 13.1 cents per share from 43.8 cents the prior comparative period. Headline earnings per share (heps) is expected to decrease by more than 30% for 2025, which is a decrease of at least 13.6 cents per share, when compared to the heps of 45.3 cents for the year ended June 30, 2024.
In an update guidance on the company’s operational performance for 11 months of the 2025 financial year up to May 31, 2025, compared with the prior comparative period, KAP said trading conditions have remained challenging, with sentiment further dampened by the uncertainty created by the delay in the approval of the national budget, the resultant instability of the Government of National Unity and the potential negative effects of the US's tariff war. Additionally, April was a particularly weak month due to the limited trading days.
In this context, the group delivered a modest growth in revenue, a reduction in Ebitda, a decline in operating profit and meaningfully lower earnings during the period.
KAP said it continues to make progress with the execution of its strategy, to realise value from the major capital projects; improve the financial performance of underperforming businesses, mostly Unitrans; and the reduction of net debt.
Divisional performance:
PG Bison successfully started and ramped up its new R2 billion MDF (Medium-density fiberboard) line in Mkhondo in the first half of 2025. Revenue was higher due to a 90% increase in MDF domestic and export sales volumes, primarily attributable to the higher MDF production. Particleboard sales volumes were stable. Operating profit declined as the depreciation and running costs of the new MDF line were absorbed during the period, with utilisation not yet optimal due to the ramp-up process.
Safripol delivered an increase in revenue and operating profit, largely due to higher production and sales volumes. Unitrans completed a major organisational redesign in November 2024, which formed part of a deep restructuring focused on the cessation of low-margin, low-return activities, improved asset utilisation and reduced costs.
Feltex encountered challenging trading conditions, mainly because of lower vehicle production, with two major OEM customers being meaningfully lower due to temporary operational constraints at their plants. Sleep Group increased revenue and operating profit, primarily due to growth in sales of bedding units, despite a subdued bedding and furniture market. Optix delivered lower revenue and operating profit, with suboptimal conversion of the sales pipeline.
Balance sheet
KAP said it has completed a major investment cycle, with all projects commissioned and operational. "The only remaining major capital commitment relates to improving the average fleet age of Unitrans’ vehicles. This catch- up capital expenditure will be phased over three to five years and we therefore do not expect it to have a major impact in any single year," it said.
"We invested in future growth, of which PG Bison’s new MDF line is the largest and most recent investment. The line resulted in a 33% increase in the division’s total production capacity and offers compelling growth opportunities for the group, it said.
KAP said it was making good progress in addressing areas of underperformance, the most material of which relates to Unitrans, where an operating profit of R700 million is targeted over the medium term. Reducing net debt is also a priority.
In line with the board’s succession planning, Frans Olivier was appointed as the new CEO following Gary Chaplin’s recent resignation that was announced on May 29. Chaplin will assist KAP to the end of October to inter alia ensure a smooth transition over the year-end and audit period, KAP said.
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