JSE-listed KAP Industrial achieved a 17% year-on-year increase in revenue from continuing operations to R27.98-billion for the financial year ended June 30.

Operating profit, before capital items, increased by 40% year-on-year to R2.94-billion.

Headline earnings per share (HEPS) increased by 73% to 74.4c apiece, while earnings per share (EPS) increased by 60% to 70.3c.

Revenue from continuing and discontinued operations increased by 16% year-on-year to R27.98-billion, while operating profit increased by 52% to R2.95-billion.

HEPS increased by 98% to 75.1c and EPS by 81% to 70.2c.

KAP’s net asset value per share increased by 15% to 466c apiece.

The board of directors approved and declared a dividend of 29c apiece for the period under review, which represents an increase of 93% on the dividend paid in the 2021 financial year.

The group’s good financial performance was achieved despite the year under review having been characterised by continued sociopolitical and macroeconomic volatility and uncertainty.

KAP says its diversified business model proved resilient under these circumstances, with strong results delivered through a focus on market share gains, operational efficiencies, cash generation and capital efficiency.

It notes that the results are underpinned by a robust performance by Safripol and PG Bison.

KAP’s balance sheet remains strong, with debt levels comfortably within targeted debt serviceability ratios.

“We are really pleased with the results. It has been an extraordinary year with civil unrest, severe flooding, continued global supply chain disruptions, commodity price volatility and rising inflation. Our results illustrate the strength of our diversity,” CEO Gary Chaplin says.

KAP’s products and services include wood-based decorative panels, polymers, supply chain and related operational services, automotive components, road safety solutions and sleep products.  

“We saw continued strong demand for our polymer and decorative wood-panel products, which contributed to two of our larger businesses, Safripol and PG Bison, performing particularly well over the period.

“Feltex, our automotive components business, however, struggled to gain momentum during the year, given the extreme volatility and unpredictability in customer demand due to the global semiconductor chip shortages, civil unrest and severe flooding in KwaZulu-Natal.

“Restonic, our sleep products business, also encountered very difficult trading conditions following the civil unrest, which caused substantial damage to our customers’ retail stores and distribution centres. Together with cost inflation and a general softening in consumer demand, this resulted in a disappointing performance for Restonic,” Chaplin points out.

In addition to its manufacturing operations, KAP is also involved in supply chain and related operational services through its Unitrans business, which services the food, agriculture, mining, petrochemical and commuter transport sectors across ten African countries.

“Our South African operations performed well. However, this was unfortunately offset by reduced profitability in our African operations, where we were significantly impacted by adverse weather conditions in our agricultural operations, and by border restrictions in our petrochemical operations.

“Nevertheless, the outlook for our African operations remains favourable, with an anticipated improvement in volumes and new contracts secured during the year,” Chaplin notes.

In terms of the outlook for the months ahead, Chaplin says KAP expects market conditions to remain challenging, with subdued economic growth and softer consumer demand. KAP, nevertheless, remains optimistic about the prospects for the group.

“We have a clear strategy to deliver value-accretive growth for our stakeholders, with our existing businesses focused on running our operations efficiently and growing market share. We’ve committed to some major capital projects that will expand our current operations, and we are also actively looking for select acquisition opportunities where KAP can add value,” he notes.

KAP recently announced the construction of a R1.9-billion medium-density fibreboard manufacturing plant in eMkhondo, which will be completed in 2024, to support growing customer demand, and the acquisition of DriveRisk, a company that provides global video telematics and predictive analytics to prevent road accidents and improve road safety in 37 countries.