Drought impacts on Senwes financial results

The 2014/2015 Senwes financial results showed that agricultural companies had to do business in a volatile environment characterised by two contrasting agricultural cycles.

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The company’s profit after tax of R247 million decreased by 2%, from the R251 million for the previous financial year, according to a statement by the company.

Francois Strydom, chief executive of the Senwes Group, said in the statement that the largest crop in 33 years countered low grain carry-over stock levels from the 2014 financial year.

“An exceptional drought was experienced throughout the summer crop area of South Africa since January 2015, which put spending in respect of capital goods and input products under pressure during the second half of the financial year,” Strydom said.

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He said it was likely that the impact of severe drought conditions in the latter part of the 2015 financial year will reflect in the group’s performance for the current financial year.

“The primary producer will probably not be as profitable from a net farming income base and this will have an impact on capital goods spending capacity,” he said. This could lead to negative pressure on Senwes’ mechanisation business unit, according to him. The overall conditions would also influence the debtor book collections towards the end of August 2015, he said.