Afgri revenue up on better maize market

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.

Increased turnover Logistics
Turnover in Afgri
Logistics Services was up 17,2 % to R273 million (€ 23.5m) for the 16- month
reporting period (12 months to February 2007: R233 million or €
20m).

Headline profit before tax fell by a third to R72 million (€ 6.2m)
(2007: € 9.7m) 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
tonnes.

Silo volumes improved dramatically from about May 2008 as AFGRI
started to receive deliveries of this season’s maize crop from
farmers.

Seed business poor
It was a satisfactory period for
Afgri Producer Services, with turnover up 51% to R5,7 billion (€ 490m), though
headline profit before tax declined by 11% to R32 million (€ 2.74m) due to a
poor performance by the Seed business, which recorded a loss of R33 million (€
2.83m).

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.

Animal feed turnover doubled
It was an excellent
trading period for Afgri Products with a 92,8% increase in turnover to R3,3
billion (€ 283.7m) and headline profit before tax of R170 million (€ 14.6m),
24,8% up on the previous year.

Animal Feeds had an outstanding trading
period, doubling turnover to R1,99 billion (€ 171m), and growing headline profit
before tax by 82% to R151,6 million (€ 13m).

Tough times for
Daybreak
Daybreak Farms recorded a loss of R2 million (€ 171,000) for the
period, compared to a R37 million (€ 3.2m) 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 (€ 12.4m) 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.

Emerging farming looses
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.

Margins under pressure
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.

Related website: AFGRI Ltd

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