Wrap Text
Operational update and initial trading statement
KAP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1978/000181/06)
Share code: KAP
ISIN: ZAE000171963
Company alpha code: KAP
LEI code: 3789001F51BC0045FD42
('KAP' or 'the company' or 'the group')
OPERATIONAL UPDATE AND INITIAL TRADING STATEMENT
The following update provides guidance on the group's operational performance for the 11 months of the 2026
financial year up to 31 May 2026 ('the period'), compared with the 11 months of the 2025 financial year up to
31 May 2025 ('the prior period').
OVERVIEW
The group continued to operate in a challenging trading environment during the period, characterised by subdued
consumer demand, global oversupply in certain product categories, ongoing competitive pressures, rising trade
barriers and geopolitical uncertainty. More recently, the conflict in the Middle East, including the closure of the
Strait of Hormuz, have heightened uncertainty, contributing to disruption in global supply chains, increasing
operational complexity and leading to additional inflationary pressures.
In this context, revenue was stable and EBITDA, operating profit and earnings increased during the period, largely
attributable to the following:
• increased panel production and sales volumes, including full utilisation of PG Bison's new medium-density
fibreboard ('MDF') line, which was commissioned during the year ending 30 June 2024 and ramped up
during the year ending 30 June 2025 ('FY25');
• increased domestic new vehicle assembly volumes, which supported an improved performance by Feltex;
• an improvement in underperforming businesses, primarily Unitrans; and
• lower net finance costs.
The prior period's performance was negatively affected by increased operating costs related to the ramp-up of PG
Bison's new MDF line as well as lower domestic new vehicle assembly volumes.
The outlook for the operating environment is uncertain, with limited near-term visibility due to recent geopolitical
developments. Safripol, strategically positioned as a local manufacturer, benefited from increased sales volumes
and higher global polymer prices arising from the conflict in the Middle East. However, the sustainability of these
gains is unclear considering the uncertainty around the duration of the conflict, the timeframe over which supply
chains will normalise, and the potential for second-order effects, such as softer demand. Management remains
focused on factors within their control, including operational efficiencies, cost savings and increased value-added
sales volumes, while continuing to execute on the group's three key strategic objectives: realising value from the
major capital projects, improving underperforming businesses and reducing net debt.
DIVISIONAL OPERATIONAL PERFORMANCE
PG Bison delivered higher sales volumes, supported primarily by demand creation and customer-enablement
activities, the development of new markets, specifically for MDF, and underlying demand growth, enabled by
increased production volumes. The division continues to make good progress in redirecting sales from marginal
deep-sea export markets to higher-margin markets. The division's prior-period performance was constrained by
the ramp-up of the new MDF line, during which utilisation was not yet optimal while costs increased. Revenue and
operating profit were consequently meaningfully higher compared with the prior period.
Safripol was impacted by the cyclical downturn in the polymers industry for most of the period, 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, mainly due to increased imports priced materially below
market prices, which necessitated two commercial shutdowns at the PET plant in Durban. However, supply
disruptions arising from the conflict in the Middle East resulted in reduced import competition and significantly
higher raw material and polymer prices towards the end of the period. Although the division's reported revenue
and operating profit for the first half of the year ending 30 June 2026 ('FY26') were lower than in the first half of
FY25, these factors limited the revenue decline for the period to moderate levels and supported a marginal
increase in operating profit relative to the prior period.
Unitrans' revenue was moderately lower, mostly owing to the passenger operations, which closed commuter
operations in Mozambique and disposed of a local commuter contract in FY25. Operating profit increased
meaningfully, primarily due to cost savings, improved operational efficiencies and higher fleet utilisation, which
offset a lower contribution from the passenger operations. The division continued to focus on the cessation of low-
margin, low-return activities.
Feltex benefited from increased domestic new vehicle assembly volumes, as well as improved sports utility vehicle
and light commercial vehicle sales, predominantly in the first half of FY26. In the prior period, sales volumes were
affected by temporary operational constraints at two original equipment manufacturers, while the division also
incurred costs related to a major model changeover. These factors have since resolved. Revenue and operating
profit were therefore meaningfully higher, despite a softening in the second half.
Sleep Group operated in challenging trading conditions, primarily due to subdued consumer demand. Revenue
increased marginally, supported by an improved sales mix and the inclusion of the Botswana operations. Operating
profit declined moderately as a stronger performance in the division's raw material operations, particularly the
turnaround in its foam operations, was offset by a weaker result from the bedding operations, reflecting lower
bedding unit sales and higher marketing costs.
Optix delivered significant growth in subscriptions. However, the growth in recurring revenue was offset by lower
hardware sales, resulting in a moderate decline in revenue. Revenue growth remains constrained by slow,
although improving, sales pipeline conversion. In the prior period, the division invested in executive, sales and
operational capacity to accelerate sales pipeline conversion, which contributed to increased costs. As a result, the
operating loss increased from the prior period.
STRATEGY EXECUTION
Management continues to make steady progress with the execution of the strategy, delivering on the following key
objectives, which are expected to support group performance over the medium term:
• Value realisation from the major capital projects: The group has invested in future growth, with PG Bison's
new MDF line representing the largest and most recent investment. This investment increased the division's
total production capacity by 33% and is expected to offer compelling growth opportunities. To unlock further
value from existing capacity, the division plans to install an additional upgrading press during the second
half of the year ending 30 June 2027 ('FY27').
• Addressing underperformance: Some businesses, of which Unitrans is the most significant, are not
delivering the required levels of growth and returns. Management is targeting an annual operating profit of
R700 million for Unitrans over the medium term.
• Reducing net debt: Management is targeting a net debt reduction of R500 million for FY26, with a further
reduction planned for FY27. This is expected to be supported by lower capital expenditure following the
completion of recent investments, cash flow contribution from these investments, and an improved
performance from Unitrans. Lower net debt levels are expected to increase balance sheet flexibility and
support earnings growth.
In line with the board's succession planning, Frans Olivier was appointed as the new chief executive officer,
effective 1 November 2025, following the resignation of Gary Chaplin. Dries Ferreira was appointed as the new
chief financial officer, effective 1 February 2026.
INITIAL TRADING STATEMENT
In terms of the JSE Listings Requirements, a listed company is required to publish a trading statement once it is
satisfied that a reasonable degree of certainty exists that the financial results for the next period to be reported on
will differ by at least 20% from the financial results for the prior corresponding period.
While one month remains of FY26, if current trading conditions persist:
• A reasonable degree of certainty exists that headline earnings per share ('HEPS') is expected to increase
by more than 50% for FY26 to at least 36.2 cents per share, compared to the HEPS of 24.1 cents reported
for FY25.
• Earnings per share ('EPS') is expected to be at least 34.2 cents per share for FY26 before the effect of
potential impairments, compared to the EPS of 0.4 cents reported for FY25, which was significantly impacted
by impairments of goodwill, intangible assets and property, plant and equipment related to certain underlying
investments, as detailed in the group's FY25 annual financial statements.
A further trading statement will be issued in terms of the JSE Listings Requirements when a reasonable degree of
certainty exists about the likely range of the expected increase in HEPS and EPS.
Shareholders are advised that the information and guidance set out above, and the financial information on which
this operational update and trading statement are based, have not been audited, reviewed or otherwise reported
on by the company's external auditor.
FY26 RESULTS
The results for FY26 are expected to be released on or about 1 September 2026.
Stellenbosch
12 June 2026
Equity and Debt Sponsor
PSG Capital
Date: 12-06-2026 02:00:00
Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
