•••• MAIN ARTICLE
Interim Results with Francois Strydom
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SENWES SCENARIO VISITED THE SENWES GROUP CHIEF EXECUTIVE OFFICER , FRANCOIS STRYDOM , TO DISCUSS THE INTERIM RESULTS .
AUBREY KRUGER
A TYPICAL SENWES SEASON In effect Senwes ’ year consists of four months , namely November , December , January and February . The activities of a large portion of the customer base are at its highest during this time . It is tilling and planting season . Producers spend an amount of money on their maize crops , up to a certain stage , and then the proverbial gates are closed . They may still do some crop spraying , but the diesel , seed , mechanisation , weeding , spraying and fertilising have been finalised . From a cost approach these four months are critical - the peak of Senwes ’ economic cycle . This is the reason why producers go on leave in March / April and why Senwes personnel have to work from November to February .
WHAT DOES SENWES DO IN ESSENCE ? Remember , we stand between the producer and the processing industry . In essence Senwes is a distributor of products and services . We distribute the input products to producers and then
FEB / MAR 2017 • SENWES Scenario
we distribute the produced product to the processing industry . This is our business .
OUR RESULTS ? Our turnover increased by 25 % to R5,7 billion for the first six months , which was mainly driven by high commodity prices - white maize peaked at a high of R5 000 per ton . The price is R3 000 today . The EBITDA increased by 9,6 % to R262 million . The EBIT increased by more than 10 %, from R217 million to R240 million , but the net profit line decreased from R103 million to R91 million .
WHY THE LOWER NET PROFIT ? The main reason for the decline in net profit is the higher turnover as a result of commodity prices . The result is a higher balance sheet and a larger interest component . Obviously our business units are also still under pressure as a result of the drought .
OUR BUSINESS PERFORMANCE Market Access reflected a R57 million operating profit , Input Provision a R31 million operating profit and Financial Services an operating profit of R69 million . Given the cycle , it is a very good performance . Obviously some of the businesses in our business portfolio , such as Hinterland and Prodist , are under pressure . Focus is being placed on our debtor book on the credit extension side of the business . Our grain trading business experienced very low volumes and Grainlink and Tradevantage are also under pressure .
FRANCOIS REMINDS US OF THE PRODUCER SIDE OF THE BUSINESS - THE BEGINNING OF THE CYCLE As far as turnover is concerned , the producer side of our business represents less than 50 % of our business . What is important , however , is that it is the beginning of the cycle . Processing , logistics and financing are higher on the turnover side of the business since value has already been added to the product . If the tonnages produced by the producer are not put into the value chain , the other side cannot function . It is an interesting concept . It may be logical to all of us . We are at the beginning of the food chain . We have approximately one million producers , which include large , medium and small producers - from subsistence farmers to emerging farmers and even women producing vegetables for their own families . On the other hand we have between 45 and 55 million consumers in South Africa . In addition we provide in the food requirements of 30 % to 40 % of the SADC .
THE SPENDING CYCLE The spending cycle in the summer planting area of the Southern Hemisphere is important to us . Primary tilling is done from June to September and planting season ,