This article first appeared on GuruFocus.
Revenue: ZAR29.6 billion, stable year-on-year.
EBITDA: Improved 13% to ZAR3.9 billion.
Operating Profit (before capital items): Improved 28% to ZAR2.5 billion.
Operating Margin: Improved by 190 basis points to 8.4%.
Headline Earnings Per Share (HEPS): Improved 88% to ZAR0.452 per share.
Loss Per Share (after impairments): ZAR0.048 per share.
Cash Generated from Operations: Improved 30% to ZAR3.9 billion.
Free Cash Flow (before dividends): ZAR1.3 billion, an improvement of 178%.
Net Interest-Bearing Debt: Reduced 14% to ZAR7 billion.
Return on Capital Employed (ROCE): Improved by 280 basis points to 11.2%.
Net Debt-to-EBITDA: 1.8 times.
EBITDA Interest Cover: 4.6 times.
PG Bison Revenue: Increased 15%.
PG Bison Operating Profit: Increased 30%.
PG Bison Panel Sales Volumes: Increased 13%.
Safripol Revenue: Down 6%.
Safripol Operating Profit: Up 25%.
Unitrans Revenue: Down 7%.
Unitrans Operating Profit: Up 41%.
Feltex Revenue: Up 14%.
Feltex Operating Profit: Up 63% to ZAR270 million.
Feltex Return on Capital Employed: 18%.
Sleep Group Revenue: Flat.
Sleep Group Operating Profit: Down 26%.
Optix Revenue: Down 10%.
Optix Subscriptions: Increased 74%.
Capital Items (Impairments): ZAR1.568 billion.
Release Date: September 01, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Improved profitability, cash generation, and returns despite challenging trading conditions and supply chain disruptions.
PG Bison achieved full utilization of its new MDF line, with panel sales volumes up 13% and operating profit up 30%.
Unitrans delivered a strong turnaround with operating profit up 41%, driven by disciplined execution and exiting low-return contracts.
Feltex posted a record performance with operating profit up 63% and return on capital employed above target at 18%.
Net debt reduced by ZAR1.1 billion, exceeding the ZAR500 million target, with net debt-to-EBITDA improving to 1.8 times.
Negative Points
Sleep Group and Optix reported lower results, with operating profit down 26% and an increased operating loss, respectively.
Safripol faces headwinds from global polymer oversupply, subdued demand, and a stronger rand, which is expected to pressure future results.
The group recorded significant impairments of ZAR1.568 billion, including goodwill and intangible assets, leading to a loss per share.
Unitrans requires substantial catch-up capital expenditure of ZAR1.3-1.5 billion over the next few years, which may strain cash flow.
The operating environment remains uncertain, with potential impacts from Middle East conflicts, higher fuel prices, and moderating polymer margins.
Q & A Highlights
Q: Are you participating in any new contract bids to offset the exit of low-return activities in Unitrans?A: Frans Olivier (CEO): Yes, we are continuously looking at new opportunities and new work. However, it is not easy to find good quality work that we can do at a rate and return that suits our requirements. We are continuously looking at it, but the focus remains on disciplined capital allocation to projects where we can make a decent return.
Q: Given the high ongoing investment required for Unitrans, can the division grow and achieve the targeted returns?A: Frans Olivier (CEO): Yes. We started the process for a reason, and that is to get the division ultimately within our timelines at our required returns. That is what we are busy executing. It will take time, but we are focused on that, and we believe we will get to the required return. The division maintains its ZAR700 million medium-term operating profit target.
Q: What were the key drivers behind the group’s improved profitability and cash generation in FY26?A: Frans Olivier (CEO): The improved performance was supported by disciplined execution across the group, focusing on customers, costs, asset optimization, and strict working capital management. PG Bison, Safripol, Unitrans, and Feltex all contributed to the improved performance, with Sleep Group and Optix results lower. The group successfully reduced net debt by ZAR1.1 billion, exceeding its ZAR500 million target.
Q: What is the outlook for PG Bison following the full utilization of the new MDF line?A: Frans Olivier (CEO): PG Bison sold full utilization of the new MDF line during FY26. The focus is now on installing a new value-add MFB line in H2 ’27, which will add roughly 40% upgrading capacity. The strategy is to reallocate sales from lower-margin spot export sales into higher-value export regions while maintaining total volume, driving higher margins and returns.
Q: How did Safripol perform given the challenging polymer market conditions?A: Frans Olivier (CEO): Safripol experienced two distinct periods. The first nine months were challenging with global oversupply and weak pricing. However, in Q4, Middle East supply chain disruptions tightened global polymer markets, temporarily increasing margins and reducing import competition. This resulted in operating profit up 25% despite revenue down 6% due to rand strength. The company expects margins to normalize as supply chains recover.
Q: What were the main drivers of the ZAR1.568 billion impairments recorded in FY26?A: Johan Holtzhausen (Lead Independent Non-Executive Chairman): The impairments included ZAR389 million for Sleep Group goodwill, a write-off of Safripol intangible assets due to a fundamental change in long-term trajectory from a stronger rand and global overcapacity, and ZAR122 million for Optix intangible assets related to the Lytx supplier relationship contract in Australasia. These impairments reduced headline earnings to a loss of ZAR0.048 per share.
Q: What is the group’s capital expenditure plan, particularly regarding the catch-up CapEx in Unitrans?A: Johan Holtzhausen (Lead Independent Non-Executive Chairman): Manufacturing CapEx amounted to ZAR504 million, primarily for the PG Bison MFB plant. Non-manufacturing CapEx included ZAR346 million of catch-up CapEx in Unitrans, with more anticipated in ’27, ’28, and ’29. The group previously warned of ZAR1.3 billion to ZAR1.5 billion of catch-up CapEx required in Unitrans, and the plan is on track.
Q: How did the group’s balance sheet and debt position improve during the year?A: Johan Holtzhausen (Lead Independent Non-Executive Chairman): Net interest-bearing debt improved by 14% to ZAR7 billion, reducing net debt-to-EBITDA to 1.8 times, well within the bank covenant of 3 times and the internal target of 2.5 times. EBITDA interest cover improved to 4.6 times. The group targets another ZAR500 million debt reduction in FY27.
Q: What is the outlook for Feltex given the expected moderation in vehicle assembly volumes?A: Frans Olivier (CEO): Feltex delivered a record performance with operating profit up 63% to ZAR270 million and ROCE of 18%. Assembly volumes are expected to moderate in the next year, but a new LCV model was successfully introduced in H2 ’26 without the cost overruns of previous model introductions. A replacement SUV model is planned for H2 ’27, and the division continues to focus on localization opportunities.
Q: What is the group’s overall outlook and strategy for FY27?A: Frans Olivier (CEO): The operating environment is expected to remain uncertain and challenging, with potential headwinds from moderating polymer prices and a stronger rand. However, the group remains focused on three main objectives: improving returns, extracting further value from recent investments, and addressing underperformance in Unitrans and Optix. The group targets another ZAR500 million net debt reduction in FY27 while balancing disciplined investments and value-accretive growth opportunities.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.