KAP (KAP) H2 2026 earnings summary

Executive summary

• FY 2026 marked the first year of a multi-year turnaround, with disciplined execution driving improved profitability, cash generation, and returns despite challenging trading conditions and supply chain disruptions, including those from the Middle East conflict.

• Net debt was reduced by ZAR 1.1 billion, more than double the initial target of ZAR 500 million.

• All major divisions except Sleep Group and Optix contributed to improved performance, with PG Bison, Safripol, Unitrans, and Feltex showing notable gains.

• Strategy execution established momentum for improved returns and shareholder value, with further progress required over the next 3–5 years.

Financial highlights

• Revenue stable at ZAR 29.6 billion year-on-year.

• EBITDA up 13% to ZAR 3.9 billion; operating profit before capital items up 28% to ZAR 2.5 billion.

• Operating margin improved by 190 bps to 8.4%.

• Headline earnings per share up 88% to ZAR 0.452; after impairments, a loss of ZAR 0.048 per share.

• Free cash flow before dividends up 178% to ZAR 1.3 billion.

• Net interest-bearing debt down 14% to ZAR 7 billion.

Outlook and guidance

• Momentum expected to continue into FY 2027, but operating environment remains uncertain due to global risks, inflationary pressures, and volatile polymer prices.

• Focus remains on extracting value from recent investments, addressing underperformance, and disciplined capital allocation.

• Targeting further ZAR 500 million net debt reduction in FY 2027.

• Unitrans medium-term operating profit target maintained at ZAR 700 million.