February 25, 2010

Afgri H1 earnings up 4%

South Africa's Afgri Limited posted a 3.9% rise in first half headline earnings per share on Wednesday (Feb 24), buoyed by its grain storage and animal feed businesses.

The agricultural services group said earnings per share for the first six months of its financial year rose 22.6% to 48.6 cents, while its cash position improved by ZAR317 billion (US$40.8 billion).

The group's grain storage division contributed greatly to the result after South Africa recorded another bumper corn harvest last year. Afgri said margins in its grain trading division had come under pressure due to higher premiums for physical corn, but the unit spearheaded the group's expansion into Africa through physical grain trading operations.

The Animal Feeds business saw an improvement in volumes and margins through effective procurement and ongoing improvements in the formulation and manufacturing processes. The company plans to expand its Animal Feeds business by renovating its 60,000-tonne factory in Pietermaritzburg in the south-eastern KwaZulu-Natal province, which is expected to begin production in April.

Afgri sold its Western Cape business to Capital Harvest earlier this month and disposed its Tsunami crop and plant care units to Arysta in January as part of a plan to focus on the grain business.

There could be further restructuring of the business, the company said.

The group expects its results in the second half of the year to be impacted by the size and timing of the summer crop, as well as improvements in credit markets and consumer spending.