In a tough year for the global economy and the farming industry, southern African agriculture and food group Acorn Agri & Food managed to post positive results and successfully conclude three acquisitions.
The company reported year-on-year growth in revenue of 40% to R11.2 billion.
“Upon reflection of the 2022 financial year, ended 28 February, it becomes clear that our group reported great victories despite being faced with tough battles,” says CEO André Uys.
Acorn Agri & Food is a public company that invests in companies that support food security.
It operates in agricultural inputs and services, energy, logistics, primary agricultural production and food processing.
The group reported an operating profit before capital items of R326 million, an increase of 17% on the previous financial year.
Shareholders will also be pleased with the announcement of a 13% increase in adjusted headline earnings per share of R1.15 and a dividend of 50c per share being declared (67% growth from the prior year).
The group has shown progress in its diversification strategy, despite challenges brought on by the pandemic and pronounced changes in the market conditions of primary agriculture.
The three acquisitions planned for the 2022 financial year and successfully concluded are Ascendis Animal Health (now known as the Kyron Group), Meat Matrix (now known as Matrix Software) and Bachmus Oil & Fuel Supplies, with its head office in Namibia.
“These new businesses offer exciting growth prospects and [add] synergistic value to our group,” says Uys.
“This has already started to come through in the company’s performance, which has materially exceeded our forecasts to date, and also cemented the company’s regional reach within southern Africa.”
Diversified business model
CFO Andries Geertsema confirms the importance of a diversified business model within the agricultural sector. “The 2022 financial year has proven the effectiveness and importance of our diversified business model. Excluding the challenging environment subsidiary ACG Fruit experienced in the financial year, the group has performed the best on record in terms of cash generation and operating profit before capital items.”
Geertsema elaborates on how the group’s operating profit was negatively affected by ACG Fruit’s difficult trading conditions pertaining to current citrus and table grape market conditions.
“Compared to the prior year, the price per carton for citrus and table grapes decreased 27% and 15% respectively with a stronger rand also impacting the results.”
Uys comments that there are definite storm clouds on the horizon with regards to exporting fruit into the EU due to depressed citrus and grape prices and excessive freight charges.
“The consumer is also under pressure and particularly sensitive to price. In addition, primary producers are under inflationary pressures as basic agricultural inputs are more expensive. Luckily some of this is offset by better-than-expected grain prices,” he says.
Geertsema believes the group will be able to mitigate the short-term headwinds in the fruit export industry.
“We benefit from the current excellent agronomic conditions and high commodity price cycle and see strong demand and growth in our agri-inputs and services, as well as the energy segment,” he says.
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