The Senwes Group, a South African agricultural company with a John Deere footprint in Eastern Germany, recently announced its financial results for 2022/23.
Despite current industry challenges, all stakeholders are smiling after Senwes Group reported 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%).
Francois Strydom, CEO of the Senwes Group, said the figures 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,” said Strydom.
“When comparing the latest results to the previous year’s, we are grateful for a second consecutive good year.”
What’s behind rising profits?
The higher profits can be attributed to several reasons. The Senwes Group has expanded significantly and the higher figures not only come from the same customer base but from 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 said.
Strydom highlighted that maize not being graded as WM1 usually represents about 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, farmers were still able to deliver high volumes, and a favourable maize price worked in their favour,” confirmed Strydom.
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, he added.
Challenges and opportunities
Strydom also referred 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,” he said.
Furthermore, 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.
Future outlook
Strydom said digitisation is high on the list of new plans and that further mergers and acquisitions will be considered should the opportunity arise.
However, balance sheet protection remains of cardinal importance, despite ongoing business investments.
“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,” he said.
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