September 6, 2010

Afgri reports 32% increase in profits

Afgri, the leading listed South African agricultural services group, has reported a 32% improvement in consolidated profit over the previous financial period.

Earnings per share attributable to shareholders increased by 30% from 72.7 cents per share to 94.7 cents per share and the group's cash position improved by 43% to end the period with cash of ZAR690 million (US$96.1 million).

Afgri committed to growing its investment in the food sector by recently acquiring Rossgro Chickens and the remaining minority interest in Midway Chix. Purchasing Rossgro Chickens increased abattoir capacity to over a million chickens per week. Afgri's overall poultry business is now more complete in its ability to supply day old chickens and take these through to the abattoir.

Meanwhile, Afgri Agri Services results are driven by agricultural conditions. The agricultural economy is experiencing deflation and farmers respond by deferring purchases during periods of declining prices. As such, the unit posted revenue of ZAR3,643 million (2009: ZAR4,230 million), a decline of 14%.

The Foods division, representing the more industrial elements of the group and comprising of Afgri Animal Feeds, Afgri Poultry and Nedan oil business, units performed above expectation, posting a profit before tax of ZAR196 million (2009: ZAR168 million), an increase of 17%.

The key external drivers impacting on Afgri Foods is GDP growth, consumer spending and the sustained low retail price of chicken. These factors impinged upon the foods sector although Afgri Foods has reported improved results overall.

In total, Animal Protein reported a profit before tax of ZAR171,2 million-an increase of 11% on 2009's ZAR153,7 million. Nedan experienced their best year ever with results being driven by a 28% increase in sales volumes and an improvement in gross margins.