KAL Group (KAL) H2 2024 earnings summary

Executive summary

• F24 saw a strong first half and weaker second half, with revenue down 3% year-over-year to R21.7bn and the first earnings decline in 13 years, mainly due to lower fuel prices and economic headwinds.

• Group debt reached its lowest in a decade, supported by strong cash generation and a healthy balance sheet.

• Strategic focus is on growth from farm to fork, leveraging a diverse footprint, scale efficiency, and digital initiatives.

• Convenience retail and fuel volumes were under pressure, but agri inputs and general retail showed signs of recovery toward year-end.

• The F30 strategy targets ZAR 1.5 billion PBT, with a mix of organic and acquisitive growth, especially in the fuel company segment.

Financial highlights

• Revenue declined 3% year-over-year, with comparable revenue down 3.5%.

• EBITDA decreased by 4.4% to ZAR 859.3 million; recurring headline earnings per share fell 9.4% to 561.58c.

• Gross profit margin improved to 13.7% from 13.0% last year, driven by higher margin convenience retail and assortment optimization.

• Dividend per share maintained at ZAR 1.80 (180c), with dividend cover at 3.0x, supported by strong cash generation and lower debt.

• Net interest-bearing debt reduced by ZAR 206 million; debt to equity improved to 51.3%, lowest in 10 years.

Outlook and guidance

• F25 is expected to miss the ZAR 1 billion PBT target, but normalization and growth are anticipated as challenging factors dissipate.

• F30 plan is considered achievable, with sufficient cash flows to fund growth and a focus on reducing dividend cover.

• CapEx for F25 is projected at ZAR 300 million, up from ZAR 154 million in F24, to support expansion and acquisitions.

• Lower fuel prices and interest rates are expected to stimulate travel and farm spend, supporting volume recovery.

• Healthy pipeline for QSR upgrades, expansions, and new service stations.