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LONDON (Alliance News) - Agriterra Ltd on Friday reported a widened pretax loss in its last financial year, as difficulties resulting from political instability in Mozambique and the Ebola crisis in Sierra Leone meant weaknesses in the maize and cocoa divisions offset a strong performance from the beef division.
The pan-African agricultural company said its pretax loss in the year ended May 31 almost tripled to USD15.8 million from USD5.6 million the year before, as revenue fell to USD11.8 million from USD13.8 million.
Agriterra's portfolio focuses on beef and maize in Mozambique and cocoa in Sierra Leone, and it said the year saw mixed success, with weakness in maize and cocoa offsetting a strong performance from the beef division.
Revenue from beef operations increased 31% in the year to USD5.4 million from USD4.1 million the year before, boosted by rising volumes being moved through the feedlot and the expansion of its retail units.
"Overall, we feel that the beef division has now established itself sufficiently to enable expansion both in terms of wholesale and retail sales in country, as well as by exploring the potential in the export market," Agriterra said.
However, the maize and cocoa divisions did not perform so well. Political instability in Mozambique in the run-up to the presidential elections meant transportation of maize meal to the south and north of the country was difficult, Agriterra said, while heavy rain in the second half cut off road links between the group's production and processing facilities. This, in addition to a bumper maize harvest saturating the market and reducing demand for processed products, led to a fall in revenue to USD5.5 million from USD9.7 million.
Agriterra did say though that the current maize crop appears to have returned to more typical levels, with consequent higher sales prices of maize meal, and that it expects to achieve a significant improvement in the division in the current year.
Meanwhile, operations in Sierra Leone were hampered by the Ebola crisis, as restrictions on movement in the country and reduced international investment appetite meant it had to place further development of its cocoa plantation on hold.
Sierra Leone was officially declared Ebola-free earlier this month after the country went 42 days with no new cases of the disease.
"We hope that a start to Sierra Leone's regeneration will now be possible, which will require innovative solutions to the challenges the country faces," Agriterra said, adding that its subsidiary Tropical Farms Ltd has entered into a trading agreement to supply up to 500 million tonnes of cocoa beans to a leading global company.
"The African agriculture market remains an area of exceptional growth potential. While we are still in the development phase, the board is confident that the progress we have made to date has created a strong and sustainable platform. We are now beginning to demonstrate the "proof of concept" in our beef operations and look forward to a transition into profitability," Chairman Phil Edmonds said in a statement.
Shares in Agriterra were trading up 0.8% at 0.600 pence Friday morning.
By Karolina Kaminska; karolinakaminska@alliancenews.com @KarolinaAllNews
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