(Alliance News) - Agriterra Ltd shares sank nearly 20% on Friday after reporting disappointing sales across its Grain, Beef and Snax divisions.
Shares in the Mozambique-focused investment and sustainable development company closed down 18% at 0.96 pence each in London on Friday morning.
Agriterra's pretax loss widened to USD1.6 million in the six months that ended September 30 from USD1.3 million a year before, as revenue fell by 28% to USD3.6 million from USD5.0 million.
The Grain division, Agriterra's core business, generated USD2.2 million in revenue, down from USD3.6 million a year prior. The company blamed the decline on cash flow constraints in the early part of the half-year.
In July, a USD2.0 million commercial overdraft was secured to finance further maize purchases. However, Agriterra was forced to secure a shareholder loan in August as the central bank was unable to disburse the full amount.
As of September 30, Agriterra has a total stock of 6,609 tons of maize in silo. This is insufficient to take it to the next harvest, so the company will supplement its supply by importing 4,000 tons from South Africa.
Rising transport costs and an influx of cheap beef from South Africa due to the weakening of the South African rand against the Mozambican currency forced Agriterra's beef division to engage in cost-reduction efforts. The division saw revenue drop to USD1.5 million from USD1.6 million a year before. Agriterra expects beef division sales to increase by 20% in the second half of the year.
Agriterra's Snax division generated USD1.0 million in revenue for the interim period, down 19% from USD1.3 million year-on-year. The division is a joint venture with Snacks of Africa. Therefore, its sales do not fall within Agriterra's consolidated revenue.
Agriterra Chair Caroline Havers said: "All divisions have been striving to be self-sustaining at low capacity utilisation and now are expanding into profitable operations as volumes increase after right-sizing. Management will continuously monitor operations for profitability and seize new market opportunities creating a group basket of products to effectively lower overheads per product in the medium to long term."
By Hugh Cameron, Alliance News reporter
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