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 R690 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 is a strategic move for AFGRI, by increasing the abattoir capacity to the intended goal of just 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.
“The Delmas abattoir and the Rossgro abattoir are only eight kilometres apart and we will be able to join together marketing and sales forces. Our contract growers are also the same, so overall the deal has fantastic synergies for AFGRI,” indicated CEO Chris Venter.
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 R3,643 million (2009: R4,230 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 R196 million (2009: R168 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 R171,2 million – an increase of 11% on 2009’s R153,7 million. Nedan experienced their best year ever with results being driven by a 28% increase in sales volumes and an improvement in gross margins.