Afrifresh founder and CEO Chris Conradie told businessdigest in the capital this week that its investment was long-term and had to be backed by strong management in order for the company to return to profitability.
Afrifresh bought a 40% stake initially held by Emvest in a deal executed by InterHorizons Securities. The stake might increase because the group is also the underwriter to Ariston’s US$8 million capital raising exercise approved at an extraordinary general meeting earlier this week.
Afrifresh is one of South Africa’s top producers and exporters of citrus fruit and table grapes. It is an integrated business with interests in farming, packaging, technical assurance, quality control, marketing, exporting and logistics. Its turnover last year was at US$160 million. Under the dispensation, Ariston will be listed as one of the groups’s trading facilities.
The group, Conradie said, sees the agricultural sector as dynamic and exciting, which could be expanded by continually looking for ways to increase farming operations and hectarage. The groups has 40 000 hectares of operations.
Conradie said the group believes there is much greater success in partnerships by integrating the vertical chain in the business.
He said Ariston would be able to take advantages of the synergies that are provided by the group which are spread across some of the continents.
Conradie said of the Ariston assets Favco was the unit which had the ability to generate cash much faster for the group. However the objective is to get the whole assets in the group to perform, he said.
“You cannot focus only on Favco if the yield on the farms is of low quality. Improvements have to be made across the board,” Conradie said.
Shareholders approved the US$8 million capital raising unanimously. If successful, US$3 million would go towards retiring debt, US$1,95 million towards capital expenditure and US$2,8 million would be used for working capital.
The group’s borrowings in the four months to January stood at US$4,37 million but once the funding is injected, debts would come down significantly by the end of the financial year in September.
The group is targeting a turnover of US$22,15 million at full year and an operating profit of US$1,09 million. FD Francis Chingozho told shareholders that the group anticipates a pre-tax profit of US$463 000.
Currently turnover in the four months to January was lower against the comparable period a year ago at US$3, 98 million from US$4, 34 million.
The group posted a pretax profit of US$371 000.
Ariston anticipates an improvement in capacity utilisation, operational efficiencies and higher yields per hectare. CEO Paul Spear said volumes remained below potential across the board as performance is weighed down by high labour and operating costs. — Staff Writer.