KAP share price surges 13% as operating profit rises despite economic challenges

KAP's share price surged over 13% on the JSE Wednesday after it said operating profit increased because challenges it faced in the 2025 financial year had, as expected, eased.

In an update for the five months to November 30, 2025, KAP's directors said earnings before interest, tax, depreciation and amortisation (EBITDA) increased due to increased panel production and sales volumes, including full utilisation of the new PG Bison fibreboard line; better local vehicle assembly volumes; an improvement in underperforming businesses; and lower finance costs.

The share price traded 13.13% higher at R1.81 on the JSE Wednesday, a price however that was still well off the R3.13 it had traded at a year before.

The previous year's results were impacted by higher costs from the start-up of PG Bison's fibreboard line; higher finance costs that were capitalised during construction of capital projects completed in the year to June 30, 2024, and lower vehicle production by two manufacturers.

"The group's (five month) performance should be viewed in the context of a difficult trading environment, marked by subdued consumer demand, global oversupply of certain products, sustained intense competition, and heightened uncertainty related to the United States' tariff war," KAP's directors said.

PG Bison saw increased panel production and sales volumes, supported by demand creation and customer enablement activities, and the development of new markets. Revenue and operating profit were meaningfully higher. Although at lower margins, sales to new export markets enabled the new line to be operated at capacity.

Safripol, the group's polymer producing business, remains in a cyclical low in the polymers industry due to global overcapacity, with both polymer demand and pricing subdued. Of the division's three polymers, polyethylene terephthalate (PET) continued to be the most affected.

A five-week commercial shutdown was taken at the PET plant in Durban to draw down elevated inventory levels and to balance production with demand. Revenue and operating profit were meaningfully lower.

Unitrans' performance was supported by increased volumes in the agriculture operations and a recovery in the petrochemical operations, which were restructured in the 2024 financial year. This offset a lower result from the passenger operations due to the closure of operations in Mozambique, and the disposal of a commuter contract in the 2024 financial year.

The division continued to focus on the cessation of low-margin, low-return activities. As a result, operating profit increased marginally despite a decline in revenue.

Feltex benefited from higher new vehicle assembly volumes. Temporary operational constraints at two OEM plants and costs related to a major model changeover, had mostly been resolved. Revenue and operating profit were meaningfully higher.

Sleep Group grew bedding unit sales through new products and promotional activity, despite muted customer demand. The turnaround of the foam operations progressed well. Revenue increased, supported by the higher unit sales, but operating profit was in line with the prior period.

Optix, the global fleet safety and optimisation company, delivered lower revenue after slow sales pipeline conversion. The division had invested in executive, sales and operational capacity to accelerate sales pipeline conversion, which contributed to increased costs. Operating profit declined.

Major capital commitments relate to increasing upgrading capacity of PG Bison and improving the average fleet age of Unitrans' vehicles. This catch-up capital expenditure would be phased over three to five years and was not expected to have a major impact in any one year.

In line with the board's succession planning, Frans Olivier was appointed as the new CEO, effective November 1, 2024, following the resignation of Gary Chaplin. Dries Ferreira was appointed as the new CFO, effective February 1, 2025.

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