Challenges in its poultry business unit are partly to blame for a drop in AFGRI’s profits during the 2012 half-year ending in December 2012, the South African company’s chief executive officer said.
AFGRI’s profits dropped from $14.68 million to $12.7 million, despite a 17.5 percent increase in revenue for the period.
“High input cost pressure and a drop in consumer demand due to historically high levels of poultry imports and an oversupplied market resulted in a loss,” AFGRI CEO Chris Venter said.
The company is working with industry and governmental groups to find a solution to the problem, Venter said, but the timing of the import tariffs remains unclear and are not expected to provide any relief for the remainder of the financial year.
AFGRI is continuously moitoring the valuation of the poultry business unit, and for the most current period, no impairment was necessary. However, should the proposed additional tariffs and other governmental initiatives that could harm the unit materialize, an impairment will be considered, the company stated.