Anpario plc
(“Anpario”, the “Group”
or the “Company”)
Interim Results
Anpario plc (AIM:ANP), the independent manufacturer of natural sustainable animal feed additives for animal health, nutrition and biosecurity is pleased to announce its unaudited interim results for the six months to 30 June 2023 (“H1 2023”).
Highlights
Financial highlights
– 7% decrease in sales to £15.3m (H1 2022: £16.5m) as sales growth in the United States and Australasia was offset by declines across Asia Pacific, Europe and Latin America.
– Gross profits fell by a lower amount of 3% due to an increase in gross margins to 43.9% (H1 2022: 41.9%)
– 37% decrease in adjusted EBITDA1 to £1.9m (H1 2022: £3.0m)
– 42% decrease in profit before tax to £1.4m (H1 2022: £2.4m)
– Diluted adjusted earnings per share down 42% to 5.66p (H1 2022: 9.81p)
– 2% increase in interim dividend to 3.20p (H1 2022: 3.15p) per share
– Cash balances, including short-term investments, of £7.3m at 30 Jun 2023 (31 Dec 2022: £13.6m), after £9.1m transferred to an escrow account ahead of the completion of the tender offer in July.
Operational highlights
– Sales price increases helped soften the reduction in volumes and recovered gross margins previously impacted by raw material price inflation.
– Sales growth of Orego-Stim® and pHorce® benefiting from the trend to reduce antibiotic use and demand for anti-viral feed mitigants.
– Strong growth of sustainably sourced omega 3 supplement brand Optomega® Algae.
– Received first ever King’s Award for Enterprise for Sustainable Development.
Outlook
– Further improvement of gross margin expected in H2 2023 through an anticipated further reduction in the cost of raw materials and recovery in sales volumes.
– Benefits of mitigating cost reductions and efficiency improvements implemented in H1 2023 expected to feed into the latter part of H2 2023 and more fully realised in 2024.
– Some signs of the recent challenges faced across the global agriculture industry are beginning to alleviate.
– Regulatory environment continues to move towards natural and sustainable feed additive solutions giving the Board confidence in the long-term profitable development of the company.
Matthew Robinson, Chairman, commented:
“In my first statement as Chairman, I would like to thank my predecessor, Kate Allum, for her two years of service to Anpario and the significant contribution she made in her leadership and guidance of the Board.
The Board reports the Group’s performance during what has been a difficult and challenging first half of the year for the global agricultural industry. Group sales declined by 7% to £15.3m compared to the prior year period of £16.5m, as meat protein producers came under significant margin pressure due to high feed and overhead costs, weak consumption as consumers reacted to the effects of increased cost of living and in some regions an oversupply of poultry, pork and shrimp. These difficulties inevitably led to a reduction in the use of speciality feed additives as producers scaled back production and looked to reduce input costs. Our biggest region, Asia, suffered the most, further affected by disease outbreaks of avian influenza and African swine fever (ASF).
The actions taken to recover raw material price inflation helped to increase gross margins by 2.0% to 43.9% compared to the same period last year, which would have been higher but for an under recovery of production overhead costs due to lower volumes. Our weighted average selling price increased by 25% driven by necessary price increases and a higher value-add product mix.
Adjusted EBITDA1 declined by 37% to £1.9m compared to the same period last year of £3.0m. Action has already been taken to reduce overhead costs and the automation investment in the production facility has improved efficiency at lower volume levels. The benefit of these actions will be partially felt in the final quarter and more fully in 2024. The difficult decisions taken would not have been possible without the efforts and support of our staff across the globe who have remained resolute throughout difficult trading conditions and remain focused on implementing our strategy.
The geographic and product diversity of the Group continues to serve us well but the synchronised challenges currently impacting global agriculture and most species are highly unusual. Our strategy to offer sustainable and environmentally friendly products which help customers transition away from using antibiotics and some of the harsher chemical treatments positions Anpario to take advantage of current and future trends.
The recovery in our markets is taking longer than we anticipated at the beginning of the year and is also exacerbated by high inventory levels throughout the industry. However, our sales teams are focused on offering high value differentiated solutions which deliver significant benefits to the producer across the four main species groups of poultry, swine, ruminant and aquaculture. There are signs that some of these challenges are alleviating for our customers, not least, the expectation of further falls in animal feed prices in the second half of this year. The second half has started at a similar level as the first, but we anticipate that as conditions in the industry improve and our business development initiatives prove successful, sales growth will return as the year progresses and into 2024.
We were pleased to return £9m in cash to shareholders by way of the tender offer. After this corporate action the Group retains a strong balance sheet and healthy cash balance with which to deliver on its growth objectives.”
Matthew Robinson, Chairman
1 Adjusted EBITDA represents operating profit for the period of £1.195m (H1 2022: £2.313m) adjusted for: share based payments and associated costs £0.120m (H1 2022: £0.091m); and depreciation and amortisation charges of £0.590m (H1 2022: £0.604m)
| Enquiries: Anpario plc: | ||||
| Richard Edwards, CEO | +44(0)7776 417 129 | |||
| Marc Wilson, Group Finance Director | +44(0)1909 537 380 | |||
| Shore Capital:(Nominated Adviser and Broker): | +44 (0) 20 7408 4090 | |||
| Stephane AutonDavid Coaten | Corporate Advisory | |||
| Tom Knibbs | ||||
| Henry Willcocks | Corporate Broking | |||