Anpario: Challenging market conditions set to persist for first half of 2023
It reported a 1% decrease in revenue to £33.1m (US$40.62m), a 25% decrease in adjusted EBITDA to £5.2m and a 35% decrease in profit before tax to £3.7m.
Meanwhile, trading in the first couple of months of 2023 has been weak and market conditions are expected to continue to be challenging through the first half of the year, noted the feed additive supplier.
Avian influenza is a notable threat, globally, it stressed.
Supply chain disruption
The company outlined how 2022 was a difficult year, one impacted by supply chain disruption and significant raw material and logistics price inflation. “This challenging backdrop has also adversely affected many producers who have experienced input cost pressures, notably feed and energy, hurting their profitability and in some cases viability. Some farmers, particularly across the UK and Europe, decided to forgo unprofitable production which is now leading to specific food shortages in the retail channels. With less animals being reared, the demand for animal feed and, therefore, additives is inevitably lower and partly explains the group's disappointing performance across Europe.”
The period was characterized by a series of global events, not least the invasion of Ukraine by Russia, which has affected energy, agricultural commodities and certain raw materials manufactured in the region.
Global supply chains and logistics continued to be disrupted following the pandemic, it added.
Sales performance
Despite the difficult backdrop, the company saw positive sales performances in Asia Pacific, Latin America, the US, the Middle East, and Africa (MEA) and North-West Europe.
“Sales in the UK declined by 36% primarily due to a large customer reducing their use of our feed hygiene product following significant increases in the price of organic acids. The other territories in Europe experiencing declines included Belarus and Russia, following our decision to suspend trading in these territories, with sales were down by over £0.2m, and Spain and Italy where high input costs are making business very difficult for producers," commented the firm.
In China, Anpario’s sales declined by 6% with the firm citing the disruption caused by intermittent covid lockdown periods. “The opening up of China will bolster its economy and with it, meat protein consumption, in addition to supporting the wider Asia Pacific economy.”
The producer said that, given the challenges of the global supply chain, it increased its stockholding of both raw materials and finished goods in subsidiaries, but as supply chains improve its inventory levels are expected to return to more normal levels.
R&D activities continue with several scientific trials and new product development initiatives in play, it confirmed.
Lower feed material and energy prices
Akhil Patel, equity research analyst, Shore Capital, in a review of the financials, said Anpario should weather any storms as it is geographically well diversified, it has a leading market position with its broad range of products in its existing markets as well as targeting new markets such as aquaculture and ruminants and it has a strong balance sheet.
“We note raw feed material and energy prices are now off its peaks, which could suggest Anpario’s customer base will resume prior demand patterns. Thus, demand for Anpario’s products could increase as the year progresses…
“We also believe post this period of uncertainty, Anpario will become a more resilient business given its investment in its global sales teams to deliver new business across new markets, continued innovative product development targeting high-growth markets and production automation investment to control cost when volumes are subdued.”
