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AFGRI Reports Profit Increase of 32 Per Cent

by 5m Editor
1 September 2010, at 10:24am

SOUTH AFRICA - AFGRI Limited, the leading listed South African agricultural services group, has delivered what is calls 'robust financial performance' in its full year results for the year ended 30 June 2010.

Among the highlights of the report are profit for the period up 32 per cent. Headline earnings per share rose six per cent and cash at the end of the period was 690 million rand (ZAR) – up 43 per cent. Dividend declared increased by 14 per cent.

Chris Venter, CEO of AFGRI, commented: "In today's results, AFGRI reported a 32 per cent improvement in consolidated profit over the previous financial period, earnings per share attributable to shareholders increased by 30 per cent from 72.7 cents per share to 94.7 cents per share and the Group's cash position improved by 43 per cent to end the period with cash of ZAR690 million."

During the period under review, AFGRI has made significant progress in implementing the One AFGRI strategy via the disposal of five non-core business units (Seed unit, Tsunami Companies, the Lowveld and Natal region's retail stores and the Western Cape debtors' book.)

"What remains to be sold is the cash management business, Deposita and the Australian operation. We continue to assess appropriate buyers," added Mr Venter. He went on to say that the sale of non-core assets demonstrates real progress in aligning the Group with the grain value chain in the AFGRI focus area.

AFGRI is committed to growing its investment in the food sector having recently acquired 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," explained Mr Venter.

AFGRI Foods

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 per cent.

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 per cent on 2009's ZAR153.7 million.

Nedan experienced their best year ever with results being driven by a 28 per cent increase in sales volumes and an improvement in gross margins.

Prospects

Mr Ventner concluded: "Following the global recession AFGRI has emerged a stronger and more aligned business, with a clear vision of the future which includes the grain value chain, expansion into the food sector and Africa, whilst remaining committed to South Africa.

"As the Group nears the completion of its restructuring programme, the remaining core operations provide it with a diversity of products and services and a broad and loyal customer base."