DURBAN – Zeder Investments fell more than 5 percent on the JSE on Thursday after the investment holding company flagged that its earnings for the six months to end August were likely to take a hit as a result of weaker performance of most investees and difficult trading conditions experienced by the food and related business sector.
Zeder said in a guidance to shareholders that its recurring headline earnings per share would decline between 60.2 and 66.3 percent to be between 3.3 cents a share and 3.9c from last year’s 9.8c.
Last year the group reported a 158 percent increase in recurring headline earnings per share, with the group attributing the increase to favourable weather conditions.
Zeder uses the Sum-of-the-Parts (SOTP) value and recurring headline earnings per share benchmarks to provide management and investors with a transparent way of evaluating Zeder’s performance.
Zeder has invested in companies like Pioneer Foods, Capespan, Zaad, Kaap Agri, Agrivision Africa and Quantum Foods.
On Thursday it said its SOTP was valued at R6.22 a share as at the end of September.
The group said that it also expected its headline earnings per share (Heps) to fall significantly compared to last year.
It said Heps would decrease between 90.8 and 93.4 percent, to be between 2c and 2.8c compared to last year’s Heps of 30.3c.
“Heps decreased mainly as a result of the above, and due to the upward fair value adjustment of the investment in Joy Wing Mau in the prior corresponding period prior to its disposal,” the group said.
Capespan, South Africa’s largest fruit exporter, sold its 9.2 percent stake in Chinese fruit company Joy Wing Mau to a group of Chinese investors for approximately R1.16 billion last year and Zeder holds a 97.4 percent stake in Capespan.
Zeder’s attributable earnings per share will decline by between 3.7 and 7.3 percent, to be between 25.3c and 26.3c, down from last year’s 27.3c.
“Attributable earnings per share decreased by a lower percentage than recurring headline and headline earnings per share, mainly due to the reversal of the non-headline impairment charge on Zeder’s associate investment in Pioneer Foods which was recognised at the prior year-end,” the group said.
Pioneer Foods reported a 15 percent decline in adjusted headline earnings for the six months to end March to R506 million on the back of higher operating costs.
Zeder holds a 28.6 percent stake in Pioneer Foods.
The group will release its results next week.
Zeder shares closed 0.65 percent lower at R4.62 on the JSE on Thursday.