BELLVILLE-based fruit and logistics giant Capespan is starting to benefit from a re-shaping strategy introduced by MD Johan Dique, the executive who was credited with turning around sprawling agri-business Senwes. In the year to end December Capespan managed its strongest set of results in recent years on the back of increased volumes and real price increases in the markets.
Headline earnings increased by 31,2% to R115,4m and recurring headline earnings increased by 43,6% to R127,8m as a result of improved performance from both the Fruit and Logistics Divisions. Revenue grew by 27,5% to R7,2bn from R5,6bn in the prior year. Most encouraging was that the performance was achieved despite an 11% hike in operating costs, which squeezed the gross profit margin from around 15% to 13%.
Dique explained that the main driver for the increase in operating costs was the weaker rand exchange rate. He said costs from international entities made up about 44% of Capespan’s operating costs and that these increase when converted into a weaker rand.
While Capespan’s logistics division was the star performer for the period, the performance of the core fruit marketing division was also impressive. Fruit revenue was up markedly at R6,7bn (last year: R5,3bn) with gross profits coming in at R629m compared with R589m last year.
Dique pointed out that Capespan had a global marketing reach in its fruit division, and was well positioned to leverage its existing international platform to procure fruit globally and efficiently supply the majority of international consumer markets. He said a new strategy was being implemented and it aimed to give both growers and customers better access and improved service throughout the global group with a strategic focus on customer needs.
“A more open and transparent business model between Capespan entities and direct supply from source to customers should result in improved efficiencies within the supply chain and greater levels of customer satisfaction.”
Dique said early signs were positive as the Fruit Division performed very well with total group volumes in 2013 increasing for the first time since 2007 (both from South Africa and other international sources.) He noted volumes increased by 5,5% when compared to the previous year to a total of 46 million cartons. Around 44% of this fruit haul was being sourced from outside South Africa. Dique said the majority of international marketing entities benefited from the bumper crop in the South African Pome industry while aggregate volumes exported by the local Citrus industry also supported strong results.
“Improved availability combined with good citrus grower returns during the previous year, enabled us to grow our citrus volumes by 14,1%.”
Dique said volumes of fruit procured from international supply countries grew as Capespan increased supplies from Chile, Mexico, Peru, India and Morocco with market penetration increasing with encouraging growth in a number of major retail accounts.
Dique reiterated that Capespan was committed to build on Capespan’s valuable foundation and ensure the company remained a respected organisation in the global
“The changes that have been implemented are all aimed at ensuring that Capespan can continue to deliver on a sustainable value proposition to both leading producers and customers around the world.”
By Jenni McCann