KAP (KAP) H1 2026 earnings summary

Executive summary

• Revenue for H1 2025 declined 3% year-over-year to ZAR 14.9 billion, but EBITDA rose 5% to ZAR 2 billion and operating profit increased 10% to ZAR 1.3 billion, driven by strong performances in PG Bison and Feltex.

• Headline earnings per share rose 32% to ZAR 0.227 (22.7 cents), and net debt was reduced by 8% to ZAR 8.5 billion, with cash generated from operations up 39% to ZAR 899 million.

• The group maintained a strong operational focus and disciplined execution despite challenging trading conditions, subdued consumer demand, and global factors.

• Strategic priorities included value realization from recent investments, addressing underperformance in Unitrans and Optix, and further net debt reduction.

• Key divisions PG Bison and Feltex delivered robust growth, while Safripol and Optix underperformed due to industry headwinds.

Financial highlights

• Operating margin improved by 100 basis points to 8.5%, and EBITDA increased by 5% to ZAR 2 billion.

• Net finance costs decreased by 16% to ZAR 433 million, and free cash outflow before dividends improved by ZAR 576 million.

• Net working capital rose 6% to ZAR 4.4 billion, mainly due to inventory increases at PG Bison.

• Net asset value per share at 513 cents, reflecting prior year impairments.

• Net debt to EBITDA at 2.4x, EBITDA interest cover at 3.9x, both within covenant limits.

Outlook and guidance

• Focus remains on value realization from recent investments, especially PG Bison's MDF plant, and on growing value-add sales.

• Continued efforts to address underperforming businesses, with Unitrans and Optix as priorities.

• Targeting a further ZAR 500 million net debt reduction for FY 2025/26 and additional reductions by FY 2027.

• H2 expected to be softer than H1 due to seasonality and scheduled maintenance shutdowns, particularly at PG Bison.

• Strong rand expected to pressure Safripol's near-term performance.