South African multinational Capespan Group increased its total fruit volumes for the first time since 2007 last year, which helped it achieve a 27.5% rise in revenue to reach ZAR7.18 billion (US$674 million).

Total operating profit jumped by more than a third, but this was mainly due to a tripling of operating profit from its logistics segment as the corresponding figure for the fruit division was down by 10.7% at ZAR92 million (US$8.6 million).

Despite the decline in profitability, the Capespan board was optimistic in its reviewed results for 2013, highlighting a new strategy to give both growers and customers better access and improved service through the organization's global reach.

"A more open and transparent business model between Group entities and direct supply from source to customers should result in improved efficiencies within the supply chain and greater levels of customer satisfaction," the board said.

"Early signs are positive as the Fruit Division performed very well with total Group volumes increasing for the first time since 2007, both from South Africa and other international sources.

"Volumes increased by 5,5% when compared to the previous year to a total of 46 million cartons of which more than 44% is already procured from outside South Africa."

The board said the majority of Capespan's international entities - which include self-titled companies in Europe, the U.K., North America and Japan, along with Asian subsidiary Metspan - benefited from a bumper South African pome fruit crop.

The report also highlighted the South African citrus industry was supported by good export volumes, but challenges were caused by European Union citrus black spot (CBS) regulations.

"Improved availability combined with good citrus grower returns during the previous year, enabled Capespan to grow its citrus volumes by 14,1%.

"However, the effects of restrictions and new protocols imposed due to citrus black spot had a negative impact on the industry as a whole. Capespan had to overcome some real challenges but managed to achieve a competitive outcome.

"Through its global reach, Capespan successfully diverted fruit to other markets even at very late stages. Grower returns, however, were negatively affected as a result."

Volumes of internationally-sourced supply also increased, from countries such as Chile, Peru, Mexico, India and Morocco.

"Market penetration also increased with encouraging growth in a number of major retail accounts."

The board also pointed to strong results from its 25% investment in Chinese fruit wholesaler Golden Wing Mau (GWM).

"The GWM Group is well positioned to capitalise on improved market penetration in China as the high growth in formal retail is
expected to continue for quite some time.

"GWM increased its number of distribution centres to 34 within the major cities across China to ensure optimal distribution as the projected increases in consumption of fresh produce should result in increased sales in the years to come.

"Bullish forecasts are made on the back of continued growth in GDP per capita in China."

Photo: Capespan

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