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KAP posts earnings increase

Johannesburg - KAP International Holdings [JSE:KAP], an investment company with a portfolio of diverse manufacturing businesses, on Tuesday announced an increase in headline earnings per share (Heps) to 13.9 cents for the six months ended December 2010, from 11c previously.

Earnings per share (EPS), including discontinued operations, advanced to 13.9c, from 11.3c in 2009.

Revenue from continuing operations increased to R2.235bn from R2.026bn, due to good growth in Hosaf and the automotive divisions.

Operating profit improved by 9% to R107m.

KAP said its strategy of aggressive cost-cutting in the early phase of the downturn had proven successful in the light of the results of the past two years.

It said Feltex Automotive benefited from an increase in vehicle build over the period to 225 616 units in 2010, against 174 392 in 2009.

"Expenses, working capital and capital expenditure remain under tight control, with satisfactory cash generated as a result," the group said.

For its industrial footwear division, KAP said that trading in United Fram and Wayne Plastics remained competitive due to a reduction in construction activity after June 2010.

"A renewed focus on marketing coupled with a weaker rand should alleviate some of this pressure going forward. Increasing hide prices have also put Mossop's cyclical results under pressure," it said.

The expanded PET plant for its Hosaf division ran at maximum throughput and sales volumes grew as the local market for new PET packaging products increased in the food industry. "The performance underscores our decision to expand the plant two years ago," KAP said.

For the group's consumer segment, Bull Brand Foods generated significant cash from working capital over the period, "and this remains a continued focus area. Trading conditions are difficult due to the increased competition from imported products, particularly fish," the group said.

For Brenner Mills, KAP stated that, following the big drop in the white maize price in the second half of the 2010 financial year, the price had recovered in the first half of 2010-2011. Volumes were under pressure as Brenner followed an approach of maintaining margins.

Sales volumes for its shoe brand, Jordan, increased by about 26% to 1.4 million for the six-month period. "Lower price points were achieved due to the effect of the stronger rand on Jordan's imported footwear, and new product lines," KAP said.

Sales in Glodina increased by 9% due to greater volumes at the major chains. KAP said that margins came under some pressure due to the dramatic increase in the cotton price over the period.

Looking ahead, KAP said: "The group continues to focus on cash generation and cost control. Our past restructuring efforts have placed us in a strong position to capitalise on growth opportunities."
 
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