Kal Group eyes accelerated FY25 growth

South Africa's Kal Group, a prominent player in the agriculture and trading sectors, recently announced a decrease in annual earnings, with its headline earnings per share dropping by 9.2%. Despite this, the group remains optimistic about the future, attributing its resilience to strong cash management and reduced debt levels. In an exclusive interview with CNBC Africa, Kal Group CEO, Sean Walsh, provided insights into the factors influencing their financial performance and outlined strategies for growth in the upcoming fiscal year. While the past year saw a 3% decline in revenue, Walsh attributed this to various challenges such as reduced fuel volumes due to high prices, limited travel, and lower sales to farmers affected by high interest rates. The company also faced disruptions from road closures, impacting fuel and retail sales. However, Walsh expressed optimism for the future, citing positive trends in unit sales and agricultural channels in recent months. He highlighted plans for acquisitive growth through new service station sites and expansion in the Agri-Mark division. Discussing the company's merchandising and retail mix strategies, Walsh emphasized the importance of diversification and convenience offerings to drive gross profit margins. The addition of quick-service restaurant options at some stations contributed to a 1.9% increase in gross profit despite the revenue decline. Looking ahead, Kal Group aims to enhance its convenience offerings across all business units. One of the key areas of focus for Kal Group is the agribusiness sector, which Walsh believes will see improvements in the coming months. Factors such as lower interest rates and reduced fuel prices are expected to benefit farmers and consumers, stimulating economic activity. With a significant decrease in net interest-bearing debt equity, the company is well-positioned to invest in expansion while maintaining low debt levels. Despite the positive outlook, Walsh acknowledged potential risks in the economic environment, emphasizing the need for sustained government and private sector efforts to boost GDP growth. He highlighted the importance of infrastructure spending and commitments to drive economic recovery. Kal Group aims to capitalize on improved economic indicators and position itself to navigate potential volatility in the year ahead. In conclusion, Kal Group's focus on strategic growth initiatives and resilience amidst challenges underscores its commitment to driving positive performance in FY25. With a proactive approach to expansion and a keen eye on market trends, the company aims to leverage favorable economic conditions to accelerate growth and deliver value to shareholders.