Afgri loses out as farmers plant less

Johannesburg - Agri-business group Afgri [JSE:AFR] reported a 30% fall in full-year earnings on Wednesday as domestic farmers planted less maize than expected, but said high prices should prompt more acreage to be seeded in the coming season, boosting demand for its products and services.

The results were in line with expectations as the group had flagged to the market in late July that it expected a headline earnings drop of between 30% and 40%.

The agricultural services group said headline earnings per share for the year to end-June totalled 54.7 cents, compared with 78.6c a year earlier.

The company said earnings were knocked as farmers in South Africa planted less maize than anticipated, which decreased demand for some of its products, including inputs such as seed and fertiliser but also storage and silo services.

"South Africa produced a large maize crop for the fourth year in a row. However, the crop was smaller than originally anticipated and in certain areas, in particular Mpumalanga and Gauteng, a mid-season drought followed by an above-average late rainy season negatively influenced both yield and quality," it said.

"In addition to this, farmers reduced spending on capital equipment and other expenses. International commodity prices, including the prices of grains and food in general, only began to increase in early 2011. The combined result of these factors was that the group's overall performance was lower than (the) prior year," it said.

South African maize prices are currently trading near 3-year highs and the planting season starts in a matter of weeks.

The company declared a final dividend of 3.2c.

Afgri shares have fallen around 12% so far this year, compared with a 7.5% fall on the JSE All-share [JSE:J203] index.