Afgri eyes East Africa

Johannesburg - Agribusiness group Afgri [JSE:AFR] will use cash resources to expand its food business while exploring opportunities in East Africa.

Afgri on Wednesday posted a 6% rise in headline earnings per share for the year to end-June 2010 and declared a 14% increase in dividend payout. It has been on an acquisitive spree to grow its broiler production capacity to make it more competitive.

The group said as at June 30 2010 its net cash stood was R690m, 43% up from last year.    

"Our focus remains in the food business. We have identified some organic growth opportunities we want to pursue," said CEO Chris Venter.

Having expanded its Daybreak Farms operation, Afgri this year acquired the remaining minority interest in Midway Chix, a Limpopo-based breeder and supplier of day-old chickens to the poultry market.

Afgri also bought the processing and marketing elements of Mpumalanga-based poultry operation Rossgro during the year.

Unlike its bigger rivals Rainbow Chicken and Astral Foods, Afgri has been constrained by limited capacity in its ambition to produce chicken for all retail segments, including fresh chicken and supplying the fast food market.   

The expanded capacity will allow the group to produce over a million chicks a day, subsequently tilting the economies of scale in its favour.

Venter said Afgri wanted to add one more African country into its portfolio this year, but was not in a hurry. He said Afgri's Africa expansion plans include developing storage capacity and crop transportation logistics. 

Afgri operates grain storages in Zambia. It also has operations in Botswana, Swaziland and Mozambique. Venter said there were "exciting opportunities" for its agricultural services in East African countries such as Kenya, Malawi and Tanzania.

Venter said Afgri's restructuring to focus on agricultural services and the food business was nearly complete, with 90% of the work having already been carried through.

 - Fin24.com