Afgri of South Africa gains from bumper maize harvest

South Africa’s Afgri Ltd. on Wednesday reported a 5 percent jump in annual earnings largely due to a bumper maize harvest, but said a further deterioration of the economy may affect its businesses.

South Africa is currently mired in its first recession in 17 years, and the agricultural services group said it was concerned that this may affect its earnings prospects.

“A further deterioration in the South African economy may impact the foods division,” the group said in a statement.

“The recently lower grain prices may result in a reduction in the area to be planted for the summer season, impacting upon the producer services division.”

Afgri said earnings attributable to shareholders grew by 5 percent to 233 million rand, with earnings per share rising by the same margin to 72.7 cents.

The company said it had faced difficult global economic conditions in the financial year to the end of June, which negatively impacted on it’s 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.

Afgri said it also benefitted 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.

Source: Reuters