| Tue 16 Sep 2008, 12:01 | | AFR - AFGRI Limited - Large Maize Crop as Afgri Reports 18,7% Increase in HEPS |
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AFR
AFR
AFR - AFGRI Limited - Large Maize Crop as Afgri Reports 18,7% Increase in HEPS
AFGRI Limited
(Incorporated in the Republic of South Africa)
Registration number: 1995/004030/06
Share Code: AFR
ISIN: ZAE000040549
LARGE MAIZE CROP AS AFGRI REPORTS 18,7% INCREASE IN HEPS
HIGHLIGHTS
HEPS up 18,7% to 73,7 cents for 16-month trading period
Revenue from continuing operations up 65,9 % to R10,6 billion
Large maize crop and strong maize price create favourable agricultural business
environment following two years of poor crops
Weak performances from broiler and seed businesses
Agri services business AFGRI Limited achieved an 18,7% increase to 73,7 cents in
headline earnings per share on a 65,9 % increase in revenue from continuing
operations over the 16-month period to June 2008 (2007 financial year: R6,4
billion). The financial year-end was changed to June to better reflect the
agricultural growing season in future years.
"These results reflect two years of poor crops followed by a much improved
season for agriculture in general, helped by higher commodity prices, a large
maize crop and our ongoing focus on internal efficiencies," says AFGRI CEO John
Mooney. "This set the scene for improved results in all our businesses, with the
exception of Daybreak Farms and AFGRI Seed. Despite higher agricultural
commodity prices, input costs such as fuel, chemicals and fertiliser increased
dramatically, which will place pressure on farmers` margins next season."
The group reported a sharp increase in sales of primary inputs as a result of a
bumper maize planting season. Similarly, it was an outstanding year for AFGRI`s
Tsunami Chemicals and Retail and Equipment businesses. Retail and Equipment`s
results were enhanced by a programme of store rationalisation and improved
procurement and stock management, as well as increased buying from the farming
community in anticipation of the much improved maize commodity prices.
Financial Services also posted good results and Handling & Storage, after a
difficult period, is poised for an excellent year on the back of the bumper 2008
maize crop. Daybreak had to contend with a tough market and increased feed
prices, but a better performance is expected in the coming year. The group`s
international operations in Western Australia and Zambia continued to make good
headway.
Turnover in AFGRI Logistics Services was up 17,2 % to R273 million for the 16-
month reporting period (12 months to February 2007: R233 million). Headline
profit before tax fell by a third to R72 million (2007: R113 million) due to the
low carry-over effect of the previous two years of poor maize crops. This
business is one of the largest suppliers of handling and storage services to the
South African grain industry and represents nearly a third of South Africa`s
total silo capacity of 14 million tons. Silo volumes improved dramatically from
about May 2008 as AFGRI started to receive deliveries of this season`s maize
crop from farmers.
It was a satisfactory period for AFGRI Producer Services, with turnover up 51%
to R5,7 billion, though headline profit before tax declined by 11% to R32
million due to a poor performance by the Seed business, which recorded a loss of
R33 million. Reasons for the loss include the large volumes of carry-over seed
stock due to low sales in the prior two years, which had to be written off
during the trading period, and the high cost of developing new cultivars.
Financial Services had an excellent 16 months with revenue doubling to R1,3
billion. The Credit business had an exceptional trading period, with revenue
more than doubling to R759 million and headline profit before tax surging 100%
to R51 million. The debtors` book grew 26% to R4,6 billion over the period,
though margins were slightly lower due to the prevailing cycle of rising
interest rates and a tightening in the international credit market. Overall,
Financial Services produced an operating profit after interest and dividends of
R94 million.
It was an excellent trading period for AFGRI Products with a 92,8% increase in
turnover to R3,3 billion and headline profit before tax of R170 million, 24,8%
up on the previous year. Animal Feeds had an outstanding trading period,
doubling turnover to R1,99 billion, and growing headline profit before tax by
82% to R151,6 million. Daybreak Farms recorded a loss of R2 million for the
period, compared to a R37 million profit for the previous year. Daybreak had a
challenging year due to excess capacity in the market, with producers unable to
recover increased feed costs. Daybreak invested R145 million over the period to
expand its hatchery, farming and abattoir facilities and by November 2008 this
expansion should be completed with the abattoir`s capacity increasing to 650 000
broilers per week.
The group`s emerging farming business reported a loss for the period and was
discontinued. This operation, aimed at developing emerging farmers, will be
revisited in the coming season as AFGRI remains committed to the goal of
contributing to the creation of a vibrant emerging farming sector.
DIVIDEND
To compensate shareholders for the change in year-end, the board has approved a
special dividend of 8 cents per share.
PROSPECTS
Commenting on the outlook for the results over the coming trading period, Mooney
says the large crop expected for the season just passed will have a positive
effect on the group, particularly the Logistics Services business. However,
rising input costs, such as fuel, fertiliser and chemicals, together with high
animal and poultry feed prices, will place margins under pressure. Continued
good performances are expected from the Financial Services, Producer Services
and Animal Feeds businesses and the results of Daybreak Farms will be positively
impacted if there is the anticipated recovery in the broiler market. AFGRI
expects to show positive real growth in the coming financial period, says
Mooney.
ISSUED FOR: AFGRI LIMITED
CONTACT: John Mooney, CEO: 011 549 0606
FAX NO: 011 463 4139
E-MAIL: John.Mooney@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: 16 September 2008
Date: 16/09/2008 12:01:02 Produced by the JSE SENS Department.
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