| Wed 7 Nov 2007, 11:46 | | AFR - Afgri Limited - Afgri delivers sound results |
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AFR
AFR
AFR - Afgri Limited - Afgri delivers sound results at interim stage
AFGRI LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1995/004030/06)
ISIN number: ZAE000040549 Share code: AFR
AFGRI DELIVERS SOUND RESULTS AT INTERIM STAGE
Highlights
- 16,7% increase in total sales
- 18,9% improvement in headline earnings per share including R20 million
tax benefit
- 14,8% increase in dividend declared
- Ongoing operational improvement in Retail business
- A strong performance from the Broiler and Feeds businesses
Agricultural services group AFGRI Limited has announced headline earnings per
share of 22,7 cents for the six months ended 31 August 2007, 18,9% up on the
19,1 cents reported for the previous comparable period. Headline earnings
include a R 20 million once-off recognition of a foreign deferred tax asset.
Sales from continuing operations increased by 19,3% compared to the same
period in the prior year. The main contributors to this increase were Products
(35,6%) as a result of increased volumes and raw material prices, Financial
Services (33,7%) as a result of increased interest rates and a larger debtors
book and Producer Services (11,2%) on the back of higher primary inputs and
equipment sales. Despite maintaining market share in the grain storage
business the Logistic Services business had a 21.8% decline in sales due to
lower grain volumes as a result of the drought and the prior year`s small
crop.
AFGRI managing director Jeff Wright says the results are satisfactory, given
the drought and resultant lower yields and a summer grain crop that was
marginally down on that of the previous year`s depressed crop. AFGRI`s
financial results are also traditionally slower in the first half of the year,
he points out.
"What is particularly notable about these results is the improvement in
operational performance in the Producer Services business and the strong
performance in the Protein business in a difficult trading period," says
Wright.
Grain prices firmed in the first quarter of 2007 compared to the same period
in 2006 due to the effects of the drought and a weak rand. This had a
positive impact on farmers` profitability. Domestic white and yellow maize,
as well as sunflower, prices increased by more than 50% in the first quarter
of 2007 compared to 2006, yellow maize leading with an increase of 75% (from
R1 022 at end March 2006 to R1 791 at end March 2007). Wheat prices increased
by 49% during the same period.
Abundant rains in most parts of the country in recent weeks, and forecasts of
good rains to follow, augur well for the 2007/8 summer growing season and will
have a positive impact on the second half results, says Wright.
Segmental performance
In a difficult trading environment the operating profit after interest of
Producer Services, which is traditionally slow in the first half of the year,
improved by 50% for the period compared to the prior year. This was due to
ongoing operational improvements and an increased market share for John Deere
equipment.
Particularly pleasing was the performance of the Protein businesses, whose
operating profit after interest increased by 24,4% over the prior year as a
result of increased sales volumes and effective raw material procurement.
The Financial and Logistics Services businesses were adversely affected by the
drought and two years of small crops and as a result operating profit after
interest reduced by 50% compared to the prior year. The increased cost of
funding, higher levels of provisioning, higher than expected carry costs and
physical availability of strategically located grain has further impacted on
the results of these businesses. The Zambian business performed to
expectation.
Cash Flow
The net cash position was a negative R90 million, compared with a positive R63
million for the previous comparable period. The outflow was due to a build-up
in stock levels in anticipation of increased farmer spending as a result of a
higher level of summer plantings.
Dividend
The board has declared an interim dividend of 11,65 cents, 14,8% up on 10.15
cents for the comparable period in the previous year.
Outlook
Looking ahead to the second half, Wright says despite maintaining market share
in the grain storage business an improvement in Logistics Services can only be
expected when the new crop is received in the new year. Improved grain prices
and the expectation of good rains during the coming growing season are
resulting in increased summer grain plantings and improved agricultural sector
performance as a whole. "We will continue to focus our energies on operational
improvements and effective raw material procurement across the group, and are
therefore confident of achieving a satisfactory second half performance,"
Wright concludes.
Ends
ISSUED FOR: AFGRI LIMITED
CONTACT: Jeff Wright, Managing Director: 011 549 0606 /
082 806 1284
De Wet Goosen, Financial Director: 011 549 0602 /
082 770 7859
FAX NO: 011 463 4139
E-MAIL: jwright@afgri.co.za; idgoosen@afgri.co.za
WEBSITE: www.afgri.co.za
ISSUED BY: AFGRI Corporate and Investor Communications
CONTACT: Tish Stewart 011 442 5536 / 082 443 6399
FAX NO: 011 447 9317
E-MAIL: tishstewart@mweb.co.za
DATE: 07 November 2007
Date: 07/11/2007 11:46:54 Produced by the JSE SENS Department.
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