The Senwes Group reported a profit of R526 million for the 2020/2021 financial year, a 73,6% increase on the R303 million reported for the corresponding period of the previous year. The results showed a 57,7% increase in turnover, amounting to R7,6 billion (2020: R4,8 billion), while earnings before interest, depreciation and amortisation increased 61,1% from R600 million to R1 billion.

Senwes CEO Francois Strydom said the business had been able to deliver these results due to a combination of positive conditions.

“We need to remember that this was an exceptional year for agriculture. The fact that food and fibre were classified as essential services helped us immensely. Furthermore, both the winter and summer rainfall areas had great rainfall and a wonderful climate for production. This helped with increased production.

“Lastly, we benefitted from a boom in soft and hard commodities. This was largely due to China and the rest of the world recovering from the COVID-19 pandemic’s financial impact.”

The agribusiness declared a final dividend of 32c/ share (2020: 30c/share), with a special dividend of 26c/share (2020: no dividend). The net asset value of the group increased to R17,60/ share (2020: R15,10/ share). Earnings per share of 307,2c were delivered, which is 72,3% higher than the 178,3c/ share for the corresponding period of the previous year. Cash generated from operating activities increased 67% from R545 million in 2020 to R910 million, and the group’s input service channel showed a profit of R584 million, a 294,6% improvement on the previous year’s performance. The market access channel grew 12,9% year-on-year, with a profit of R210 million recorded.

With maize farmers currently harvesting, Strydom said it seemed as if it might be another high-volume year. However, due to rising input costs and weak consumer spending, he did not think these strong returns would endure.

“Although commodity prices remain high, freight costs have literally doubled in a year. The crude oil price dropped to US$20 [about R287] a barrel last year, but it has already increased to US$80 [R1 149] per barrel this year. Despite the fact that farmers’ lands still look great and commodity prices remain high, the price increases of diesel, chemicals and fertilisers will have a negative impact on profits.”

He said the fact that basic services such as roads, railway lines and water resources were in disarray would also hamper profitability in future.

• Senwes Ltd