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KAP Int on its food and PET divisions |
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March 2010 |
Bull Brand, long a leader in the SA corned beef market, is receiving fresh focus from its new management team, following the disposal of the fresh meat and agricultural parts of the business.
The new management team at Bull Brand (under the helm of MD Gareth
Campbell) is now focusing on the cannery in Krugersdorp, for which
there were exciting plans, on the FMCG market and on gaining market
share for Bull Brand in the Western Cape and KwaZulu-Natal markets. He
said that Bull Brand is dominant on Gauteng supermarket shelves but has
relatively little share in the other two main markets because it was
previously not halaal accredited; however, it now has this
accreditation.
Export markets particularly to Botswana, Namibia and Angola had also been identified for Bull Brand.
Schouten said Bull Brand's abattoir in Krugersdorp had not been sold.
It had a market valuation of R50m-plus but there was large overcapacity
in the abattoir business in SA, it was labour intensive and subject to
transport costs.
Brenner Mills' turnover was slightly down due to the lower maize price,
but operating profit was steady. Schouten confirmed that an excellent
maize crop is in prospect in SA and the US, which was putting downward
pressure on the price of maize currently.
PET
Kap Int's Hosaf subsidiary, which is the only producer of virgin PET in
SA (following the closure of AECI's SA Nylon Spinners) has successfully
completed its big expansion project. It is currently producing at a
rate of 125,000t/year, ahead of its original target of 115,000t/year.
This is still below the SA market's expected off-take of about 150,000t
this year. The balance is imported but at a disadvantage. Schouten said
the disadvantage of importing is a three month lead time and tie-up of
capital during that time.
Despite the rising production rate following the Hosaf project, its
turnover did not increase much because PET's price is dollar based and
its dollar price declined during the review period, while the rand
simultaneously strengthened. Thus the rand per kilogram price decreased
from R14 to R11 in the period.
Schouten said it was very unlikely that there would be any new entrants
into virgin PET production in SA. He said that in order to gain the
same capacity as Hosaf currently had, an investment of around R800m
would be required and no investor could get a viable return from this.
Internationally, he said, older PET plants are being scrapped - and in
Europe even new plants are being scrapped - because of the low
commodity price. However eventually the cycle would turn and prices
would rise.
He said that when KAP Int had bought the Hosaf plant in 2001, PET was
$300/t whereas currently it was around $100/t. Hosaf also produces
fibre from recycling activities originating from collected PET bottles.
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