Bigger portion of food

Announcing the planned acquisition - for which a price has not yet been disclosed - at a presentation of the group's interim results for the six months to end-December, CEO Chris Venter said it allowed the group to strengthen its industrial food processing capability.

It will give the group a "large" market share of the SA yellow maize milling market and enhance the relationship between the group's grain management and animal feeds businesses.

The company's foods segment grew pretax profit to R93m, 16,3% up on a year earlier. Overall pretax profit for the period was down 37% to R147m from R235m a year earlier.

Venter says further expansion of the foods business is planned to reduce the variability of the group's results, which often depend on agricultural conditions.

Earnings "not bad"

Investec Asset Management's John Thompson says an 8.1% year-on-year rise in earnings per share from continued operations was "not bad". He says the group's intention to sell its debtors book to a financial institution will free up balance-sheet cash (of more than R300m) and make it "look that much more attractive".

Thompson says the group will "hope for a little more in the second half of the year". It has put cost-cutting strategies in place, the next agricultural season looks promising and commodity prices are up.

"In an inherently volatile commodity group, the dividend yield continues to look very solid."

An interim dividend of 21.15c was declared, unchanged from a year earlier.

Though the group's John Deere farming equipment business has struggled a bit in a difficult year, equipment sales are expected to rise as farmers look for tax write-offs in the second half of the year.

Source: Financial Mail