KAP’s headline earnings per share increased by a robust 88% to 45.2 cents for the year ended June 30, but a R1.2bn impairment charge pushed reported earnings per share into a loss.
KAP’s net asset value per share fell 2.4% to R4.86 for the year ended June 30, despite an 88% increase in headline earnings per share to 45.2 cents. The shares were a standout on the JSE, rising by 12.68% to R3.11 on Tuesday afternoon after the release of the results..
Revenue was broadly unchanged at R29.6bn, while operating profit before capital items rose 28% to R2.4bn.
No dividend was declared for the year under review.
The group’s HEPS performance was supported by lower net finance costs and increased tax incentives linked to PG Bison’s new medium-density fibreboard line.
However, impairments of goodwill and intangible assets totalling R1.2bn, net of tax, resulted in a loss per share of 4.8 cents.
“The largest impairments were associated with Safripol, attributable to a stronger forecast rand relative to the US dollar and limited recovery in forecast polymer prices and margins, and Sleep Group due to continued deterioration in domestic bedding market conditions,” KAP said.
Cash generated from operations rose 30% to R3.9bn, supported by improved earnings before interest, tax, depreciation and amortisation, which increased 13% to R3.9bn, as well as lower net working-capital investment.
Net interest-bearing debt decreased by R1.1bn compared with the prior year, supported by higher cash generated from operations and lower net finance costs.
KAP expects the operating environment to “remain challenging, with recent geopolitical developments contributing to inflationary pressure and potentially constraining consumer” demand.
Polymer prices and margins are also expected to moderate as supply-side pressure eases.
“Heightened geopolitical uncertainty continues to limit visibility,” the company said.
The financial year was characterised by subdued consumer demand, global oversupply in certain product categories, sustained competitive pressure, rising trade barriers and geopolitical uncertainty.
KAP's directors said renewed conflict in the Middle East and uncertainty surrounding the reopening of the Strait of Hormuz disrupted global supply chains, increased operational complexity and contributed to additional inflationary pressure.
Despite these challenges, underperforming businesses improved, particularly Unitrans. Recovery in domestic vehicle-assembly volumes also supported improved performance at Feltex.
South Africa’s vehicle-assembly sector remains exposed to lower-priced imports and shifting global trade flows arising from United States tariff measures. Exports of a key light commercial vehicle model have also been affected by legislative changes.
These factors could affect vehicle-assembly volumes. A new light commercial vehicle model was launched in the second half of 2026, while a replacement sport-utility vehicle model is planned for 2027.
The division is prioritising localisation opportunities, cost savings and engagement with government, directly and through industry bodies, to support the sector’s growth and sustainability.
At PG Bison, a smaller upgrading press was installed at the Ugie site in June 2026. A larger press is planned for the Mkhondo site. Together, the presses are expected to increase upgrading capacity by 40%, at a total investment cost of R284m.
Safripol benefited temporarily from improved volumes and margins amid supply disruptions linked to the Middle East conflict. However, prices have started to ease as supply constraints unwind and supply chains normalise.
“The global polymers industry remains oversupplied despite the temporary tightening. Industry expectations are that the oversupply will persist until the early 2030s,” KAP said.
Safripol management is focusing on operational efficiencies, optimising procurement-to-sales cycles, realising procurement benefits and cost savings, and increasing production of higher-margin polymers.
THE NATIONAL