Estimated reading time: 4 minutes
The Senwes Group, an agricultural company in South Africa with a John Deere footprint in Eastern Germany, recently announced its financial results for 2022/23. With a turnover of R13 632 million (growth of 25,3%), a profit after tax attributable to shareholders of the company of R907 million (growth of 50,9%), and normalised headline earnings of 558,1 cents per share (growth of 40,2%), all stakeholders should be smiling despite the current challenges within the agricultural sector.
“It is important to note that the figures we are presenting, relate to the financial year from 1 May 2022 to 30 April 2023. These figures include the harvest delivered in 2022 and the input costs incurred for the next harvest, which will only reflect in our 2023/24 figures,” says Francois Strydom, CEO of the Senwes Group. “When comparing the latest results to the previous year’s, we are grateful for a second consecutive good year.”
Read more about Senwes’ financial results for the 2021/2022 year.
Strydom explains that the higher profits is a result of several influences. “The Senwes Group has expanded significantly. Therefore, the higher figures come from the same customer base, more customers, and more businesses. Although this is the second year that Suidwes figures have been included for a full year, the actual impact of the operational benefits is now at a much higher level. Falcon and KLK also delivered good results. Another important point is that the figures include ten months of our new John Deere dealerships in Germany. It remains crucial for us to allocate capital effectively.”
Strydom mentions that maize that is not graded as WM1 usually represents around 6% of the harvest but has increased to approximately 35% in the past financial year. “This is due to the exceptionally high rainfall in the previous season, resulting in waterlogged fields. Despite the lower quality, producers were still able to deliver high volumes, and a beneficial maize price worked in their favour. The significant increase in input costs for all crops during the past financial year is also notable. A good wheat harvest also contributed to these financial results.” A final dividend of 40 cents per share and a special dividend of 56 cents per share have been announced by the Senwes Group.
Looking at the different business segments, there has been consistent growth in operating profit (pre-tax and after-financing costs):
- Financial services achieved R190 million, representing an increase of 24,2% compared to the previous year’s R153 million.
- Input supply achieved R606 million, representing an increase of 26% compared to the previous year’s R481 million.
- Market access achieved R555 million, representing an increase of 70,8% compared to the previous year’s R325 million.
- Processing, conditioning and markets achieved R152 million, representing an increase of 56,7% compared to the previous year’s R97 million.
Strydom refers to the instability experienced not only in South Africa but worldwide, predicting a challenging year ahead. “The power crisis is causing losses of millions of rand and rising input costs, corruption in the government, declining prices and higher exchange and interest rates paint a negative picture. We will still obtain good volumes from the harvest that will be reflected in next year’s figures, but we expect the input channels to retract, with producers likely to have less capital expenditure.”
Read more about Senwes’ deal with Senwesbal and Suidwes.
The Senwes Group is currently finalising the acquisition of the fourth John Deere dealership in East Germany to expand its international footprint. On 29 May 2023 (after the end of the financial year), the KLK Group acquired the remaining 20% non-controlling interest in Carpe Diem Raisins (Pty) Ltd, which is now fully owned by KLK Landbou.
Strydom highlights that digitisation is high on the list of new plans and that further mergers and acquisitions will be considered should the opportunity arise. However, despite ongoing business investments, balance sheet protection remains of cardinal importance.
Strydom concludes by emphasising that Senwes is still an agriculture-focused business that prioritises relationships. “It remains a privilege to be involved with solution-driven people. These are the kind of people we join hands with as we enter the new, exciting financial year. We will continue to break new ground for and with producers and stakeholders and play an important role in shaping the future.” – Press release, Senwes