JSE-listed agricultural business holdings group Kaap Agri says it has traded well during the first quarter of its 2022 financial year, with statutory revenue up 24% year-on-year.

Kaap Agri reports in a voluntary business update that its revenue growth was driven by a 7.3% increase in the number of transactions processed and inflation of 20% – or 7.7% when excluding the impact of fuel price inflation. 

Gross profit was below turnover growth, largely owing to fuel price inflation.

However, total group fuel litres decreased by 4%, with fuel litres sold by its now disposed of fuel station property company TFC decreasing by 6.1% year-on-year and non-TFC litres decreasing by 1%.

The company expects its fuel litre performance to improve as the post-Covid recovery continues.

Retail-related revenue grew by 5.8% year-on-year in the quarter under review, and agri-related revenue grew by 24.4%, compared with the first quarter of the prior year.

Kaap Agri says the wheat harvest intake it had was the largest in 16 years, leading to storage availability challenges and increased inter-silo movements.

Earnings in the first quarter grew by 14.5% year-on-year to R126-million, which the company says was driven by strong gross profit performance and effective operational and support service cost management.

Meanwhile, in the quarter under review, the company disposed of its share of fuel station property company TFC, and acquired a further 25% shareholding in Forge and an acquisition process of PEG Retail Holdings started.

Kaap Agri says strong cash generation in the quarter has resulted in improved debt ratios.

While the overall agriculture outlook is positive, wine grape producer cash flow pressure is expected to continue.

The company also expects moderate growth in general retail, despite volatile weather patterns the last few months.

Moderate growth in general retail is expected, with fuel prices and other inflationary pressures dampening this sector. Quick service restaurant performance continues to recover slowly.

One new retail fuel site will be added during the second quarter of the 2022 financial year.

This while the PEG transaction will contribute five months’ performance during the financial year.

The overall group performance is expected to be in line with management’s upper range of medium-term targets.