The Capespan Group has revealed that it performed well in the first half of the year, increasing earnings before tax from R4.3m (€0.4m) in the corresponding period last year to R27.5m (€2.7m), while its total revenue climbed by 8.9 per cent from R1.16bn (€113m) to R1.26bn (€123m).
This, however, is far short of the group's performance in the first half of 2009 when it announced profits of R62.8m (€6.1m).
"During the first half of 2011 the Group generated good results despite the tough economic conditions encountered in most of the global markets," said Johan Dique, managing director, in the company's half-year report.
He noted that unseasonal weather patterns in South Africa and other source countries had resulted in lower grape volumes. "In addition, the strengthening rand and low interest rates have also negatively impacted on the financial results for the first half of 2011."
Dique explained that the Capespan Group generates the majority of its profits in the second half of the year.
"Global climatic conditions have taken a dramatic turn and there is a strong risk of a double dip recession," he warned. "International markets are not strong at present which is hampering the volumes being exported out of South Africa. The remaining six months will be challenging."
The increase in pre-tax earnings was the result of a significant improvement in the operating profits of both the Fruit and Logistics Divisions," Dique continued, with improvements in the Fruit Division mainly due to an improved performance in the UK, Japan and Capespan Exports.
Furthermore, benefits from the restructuring of Capespan Exports during 2010 were realised from the second quarter of the new year. The improvement in the Logistics Division was a result of the increased non-fruit activities in port terminal operations. Other non-core assets have shown improved results with the exception of increased losses suffered from an associate company, the company wine people, as a result of the impairment of fixed assets and restructuring costs.
Mr Dique said lower South African citrus industry volumes would impact negatively on the throughput in port terminals, noting that this could have a negative effect on the profitability of the Logistics Division.
"The rand is extremely volatile at present and has shown signs of weakening which will improve the translation of foreign income streams," he said.
According to Dique, the Capespan Group is continuing to focus on growing its revenue and footprint in its core business unit. "This, combined with the focus on the disposal of non-core assets, will bring greater clarity and focus in improving the balance sheet management of the Group."
