Kal Group posts strong recovery with 10% earnings growth
SOUTH African agri-fuel retailer delivers on promised turnaround as debt hits 15-year low.
KAL Group has delivered on its mid-year promises of recovery, posting headline earnings growth of 9.5% for the year ended 30 September 2025, bouncing back from what CEO Sean Walsh described as a challenging first half.
The JSE-listed agri, fuel and convenience retailer reported recurring headline earnings per share of 624.47 cents, up 11.2% – a sharp reversal from the 3.6% decline reported at mid-year.
“At mid-year, we spoke about the momentum building in our business and the uplift we expected in the second half – and we have delivered exactly that,” Walsh said.
Financial turnaround driven by debt reduction
The company’s improved performance was underpinned by aggressive debt management, with net interest-bearing debt reduced by R436.3 million during the year. The group settled R268.2 million in term debt alone, pushing its debt-to-equity ratio down to 38.1% – the lowest level in more than a decade.
This debt reduction, combined with what Walsh described as “excellent margin management,” helped lift gross profit by 3.9% despite what he characterised as a challenging economic environment.
Return on invested capital – a key metric for the group given fuel price volatility – increased from 12.6% to 13.2%, while EBITDA grew 13.8%.
The board declared a total dividend of 210 cents per share, up 16.7% year-on-year.
Agricultural strength offsets retail fuel headwinds
Agricultural performance drove much of the recovery, with the agri-input channel pushing trading profit up 8.1%. Walsh pointed to strong farmer activity, noting that recent interest rate cuts are providing significant relief on South Africa’s R250 billion farm debt.
The company handled 18% more wheat into its silos than the previous year, while the broader agricultural sector saw record citrus exports exceeding 200 million cartons in 2025. Wine production was described as excellent, with stone fruit and table grape harvests showing improvement.
“Conditions are favourable for an above-average 2025/26 grain harvest,” Walsh said, noting the company has invested in additional grain storage capacity coming online in 2026.
Fuel volumes presented a mixed picture: Agrimark fuel (focused on the agricultural channel) grew 3.7%, while overall group fuel volumes increased just 0.8%.
The only concern flagged was ongoing Foot-and-Mouth Disease outbreaks affecting the livestock subsector, though Walsh noted the group’s exposure remains low.
Expansion plans accelerate after manufacturing exit
KAL Group now operates 268 sites across South Africa and Namibia, including retail stores, fuel service stations, convenience shops and quick-service restaurants. During the year, the company added three new PEG service stations, completed 10 revamps, added 15 retail touchpoints, and opened one new Agrimark store.
For 2026, the company plans to double capital expenditure to fund the expansion of 10 new, revamped or upgraded sites across both PEG and Agrimark operations.
This expansion push follows the group’s strategic decision to exit manufacturing. The sale of Tego Plastics was completed on 30 September 2025, with the Agriplas disposal expected to conclude in the first half of the 2026 financial year.
“The sale of Tego and Agriplas puts us firmly in a position to unlock future value through our main operations and core growth drivers, Agrimark and PEG,” Walsh said.
Market undervaluation creates opportunity
Despite the strong results, Walsh believes the market continues to undervalue the business. At 30 September 2025, the company’s net asset value stood at R48.71 per share, giving a price-to-book ratio of 0.9 – improved from 0.8 at half-year but still below book value.
“Management is of the view that the market still undervalues the business based on the historic NAV, highlighting the opportunity for investors,” Walsh said.
The company stated it remains on track to deliver its 2030 strategic targets: 14% return on invested capital, 15% return on equity, and maintaining an average debt-to-equity ratio of 40% while improving dividend payments.
