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Chickenfeed for the bottom line

Agribusiness group Afgri no longer wants to depend on unpredictable agricultural conditions, which put its earnings under pressure in the six months to December 2010. The Pretoria-based former co-operative wants to grow its food business to reduce the variability of its results, which thus far have been dependent on volatile agricultural conditions, and to provide shareholders with an added stability of earnings. More than half of Afgri’s earnings are derived from its agriservices business. The division operates grain storage and logistics for farmers, among other services.

Group CEO Chris Venter says Afgri Foods – which consists of animal feed and poultry operations – contributed 36% to Afgri’s operating profiting before tax over the period under review. That was an increase of 5% on its 2009 figures.

Difficult agricultural conditions saw Afgri report a 3% decline in group revenue and 1,3% drop in headline earnings per share over the interim period. The group said it experienced lower volumes in its retail stores, lower farming mechanisation sales and, most importantly, lower commodity prices, which drive both the group’s agriservices and food sector revenues.

It said performance in its agriservices businesses was impacted by the sustained period of low maize prices following the large crop.

Afgri has been restructuring its businesses over the past few years, disposing of its non-core operations and underperforming businesses to focus on its agricultural and food value chain. It’s strengthened its poultry operations to become a fully-integrated broiler producer after it bought Mpumalanga-based Rossgro Chickens, making Afgri SA’s third-largest processor of chickens.
 
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