September 4, 2009
South Africa''s Afgri reports 18 percent hike in annual earnings
South Africa''s Afgri Ltd. reported an 18 percent increase in annual earnings largely due to a bumper corn harvest but further deterioration of the economy may affect its businesses.
South Africa is currently stranded in its first recession in 17 years, and the agricultural services group said it was concerned that this may affect its earnings prospects.
A strong agricultural year in South Africa led to JSE-listed agricultural (agri) services group increasing its net profit for the year ended June 30, 2009, to 354-million South African Rand (31.9 million euros, US$46.20 million), up 18 percent on the ZAR299-million (27 million euros, US$38.98 million) in net profit achieved in the 16 months ended June 2008.
Afgri said earnings attributable to shareholders grew by 5 percent to ZAR233 million.
The company said it is facing difficult global economic conditions in the financial year to the end of June, which negatively impacted on its lending unit''s margins, and limited the planned growth in its debtors'' book.
But this was countered by a strong agricultural year in South Africa, which harvested a bumper crop of 12.7 million tonnes for the 2007-08 season -- its highest crop in 13 years.
Meanwhile, the group stated that its Afgri foods division had continued to perform above expectations.
On the other hand, revenues at the animal feeds business had remained flat, despite a 3 percent drop in volumes.
The Daybreak Farms operation had returned to profitability, a situation that was expected to continue now that its processing facility had been matched to its production capacity of 650,000 birds a week.
Afgri said it also benefited by getting out of some underperforming businesses and tighter cost controls.
The group said its financial services division has now seen off the worst of the global credit crunch, which had constrained the growth of its debtor''s book.
US$1 = ZAR7.67 (Sept 4)