Anpario has ‘plenty of headroom’ for organic and acquisitive growth opportunities

17-Mar-2021 - Last updated on 17-Mar-2021 at 14:59 GMT

Analysts see an ‘active pipeline of earning enhancing acquisitions’ for specialist feed additives group, Anpario, across the UK, Europe, and Asia Pacific.

“We believe the animal feed market will continue to grow and adapt to changes in market dynamics, which presents the group [Anpario] with long-term structural and regulatory growth drivers and opportunities,” said Akhil Patel and Clive Black, analysts based at Shore Capital in the UK.

UK feed additives business, Anpario, reported around a 5% year-on-year (YOY) increase in revenue to £30.5m (US$42.3m), and around a 16% YOY jump in adjusted EBITDA to £6.6m in its FY2020 results today.

“Overall, despite the global challenging conditions globally caused by the pandemic, it has delivered a very strong operating performance with strong underlying cash generation and still slightly ahead of our revised projections post the year ending trading statement issued in January 2021,” said the market watchers.

The specialist feed additives firm remains in a strong financial position with no financial debt and plenty of headroom for further organic and acquisitive growth opportunities, said the analysts.

Anpario’s financial statement highlighted strong operating performances across the Americas (+9% sales variance), Europe (+29%) and Asia Pacific (+6%).

“We note sales in China showed a strong recovery reflecting farmers restocking their pig operations and [from the] phasing out of antibiotic growth promoters in animal feed due to regulation,” continued Patel and Black.

The Shore Capital duo also rated Anpario’s management team for its continued investment and development of its existing sales and marketing channels while targeting new markets with both its current and upcoming product range.

Those analysts also noted the following “key investment developments” by the company:

Setting up wholly owned subsidiaries in Vietnam and New Zealand
Expanding/leveraging its product range in new markets such as aquaculture (tilapia and shrimp) and with the possibility of offering innovative new products currently within the trial phase
New distributor appointments in Switzerland, Peru, and India
£1m investment to increase raw material and finished good storage at its manufacturing plant in Nottingham, we note currently that the UK plant is around 50% utilized (noting the possible benefits of operating leverage as volume increases)

In terms of recent headlines regarding the re-emergence of African Swine Fever (ASF) in China, they expect limited impact on Anpario’s business in the short term given that only around 11% of its total sales are into China. Anpario, they said, operates a very diversified end market model in China and it is less exposed to swine than poultry.