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Good Year for Afgri Group

by 5m Editor
2 September 2009, at 9:49am

SOUTH AFRICA - Afgri Group has announced an 18 per cent increase in profit for the curent financial year. The CEO says the company will assess potential expansion opportunities in the poultry business.

Afgri has today (2 September) reported diluted headline earnings per share of 68.9 cents for the year ended June 2009 from 68.5 cents a year earlier. Earnings per share from continuing operations rose to 93.8 cents from 89.2 cents, reports The Times of South Africa.

Group profit was up 18 per cent to 354 million rand (ZAR), while operating profit grew to ZAR 1.24 billion from ZAR 1.03 billion.

A total dividend of 36.40 cents was declared. Net cash improved by 128 per cent to ZAR 481 million.

CEO Chris Venter said the results were achieved after including a pre-tax loss of ZAR 99 million arising from the 'clean out' of under-performing operations that have been either disposed of or discontinued.

"We are pleased with the solid results and the positioning of the company for future growth," he said.

In a difficult year for the Financial Services segment and the clean-out of underperforming assets, Afgri's improved performance was underpinned by strong performances from its traditional agri-services activities resulting from a near record maize crop, a generally improved farming environment and improved operational efficiencies.

Continued contributions from the Food segment and certain once-off gains allowed the Group to post an 18 per cent improvement in post tax profit over those of the comparative 16-month prior period.

Cash generated by operating activities grew to ZAR 868 million, from being negative ZAR 143 million in 2008.

"Given our strong cash generation ability, the Board declared a total dividend for the year of 36.40 cents per share," said Mr Venter.

Looking ahead, Mr Venter said Afgri Financial Services will continue to focus the debtors book within the chosen value chain and improvement in net margin. A further deterioration in the South African economy may impact the Foods division.

The current year's large crop will support the Logistic division's results through the forthcoming financial year. The recently lower grain prices may result in a reduction in the area to be planted for the summer season, impacting upon the Producer Services division.

"Afgri has embarked on an exercise of restructuring the operations and focusing on core businesses and strengths. It is unfortunate that in such a good operational year we had to take the pain of cleaning out the operation. None-the-less, we feel strongly that we have a good base from which to work going forward," Mr Venter told The Times.

"In the year ahead, we are going to assess potential expansion opportunities in the poultry business, evaluate food processing opportunities and aim to increase market share within our strategic operating business areas," he concluded.