South African agribusinesses are adapting to the country’s challenging business environment, says Johann le Roux, the CEO of Zeder which yesterday declared a 10 cents per share dividend for the interim period to end August 2023.
Shares in Zeder inched up by 1.8% in afternoon trade on the JSE yesterday at R1.69 while it is 3% up in the past 30 days.
The 10 cents per share special dividend announced yesterday for the interim period under review was in addition to another special dividend of 5 cents per share paid on August 28.
“Even with an improved climatic cycle, macro conditions remain challenging. There was, nevertheless, a slight improvement in the recent Agribusiness Confidence Index, implying that agribusinesses are cautiously adapting to the challenging operating business conditions in the country,” Le Roux said.
Looking ahead, however, Zeder anticipates a “continuation of the uncertainty and volatility in markets in the short- and medium-term, driven by concerns about inflation, higher interest rates, deteriorating infrastructure, failing municipalities and risks related to energy availability.”
The company said “the overall macro-economic environment for the investor in the broad agribusiness sector and related industries remains relatively constrained” for the foreseeable future.
However, Capespan’s Pome Farming Unit, which has primary production operations and the Novo fruit packhouse were excluded from the deal, which has an effective transaction date of January next year.
“We want Zeder shareholders to participate in the windfall proceeds and after due consideration to the remaining investees’ growth plans, intend to distribute the majority of the disposal consideration to shareholders once received, after payment of transaction costs and all related obligations, including but not limited to, providing bridging finance assistance to the remaining Pome Farming Unit,” explained Le Roux.
He added that the company remained “engaged with third parties on the remaining portfolio investments and continues to assess further wealth maximising strategies” to shore up value for shareholders.
Zeder has an underlying investment portfolio valued at R3.49 billion. The Zaad unit, which owns, develops, imports and distributes a broad range of agricultural seeds and chemicals focussing on emerging markets, especially Africa, the Middle East and Eastern Europe, nonetheless reported a decrease in recurring earnings at R219 million for the year to June 2023.
This sharply contrasts with the R240m reported for the prior period.
There were, however, promising performances from Agricol, FarmAg and May Seed (Turkey), as well as an improved performance from East African Seeds, the company said.
In South Africa, the Western Cape having experienced excellent winter rainfall, is running at full capacity for all dams. Zeder is anticipating a “good upcoming season” based on “cold units measured on the farms that bodes well” for the pome division.
“The recent Western Cape storms fortunately also resulted in limited damage to farming infrastructure and minimal damage to biological assets.”
BUSINESS REPORT