UK- Anpario PLC’s dividends reached 10.5p, 5.0% higher than 10.0p in 2021, although the company’s profit lowered by 35% to US$4.02 million in 2022, and adjusted EBITDA fell by 25% to US$5.66 million.
The international feed additives manufacturer cited increased production costs and lowering demand for lowered profit in 2022.
Increased production costs were especially high because of supply chain disruptions that made raw materials and logistics expensive, partly due to the Russian invasion of Ukraine.
According to the company, the high costs of inputs affected animal producers’ profitability and thus, the viability of their businesses.
“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 fewer animals being reared the demand for animal feed, and therefore additives is inevitably lower and partly explains the group’s disappointing performance across Europe, ” Anpario commented.
Additionally, while there were some impressive sales performances in some regions, there were significant drops in sales in some areas in Europe, including the UK, Russia, and Belarus.
“Sales in the UK declined by 36% primarily due to a larger customer reducing their use of our feed hygiene product following significant increases in the prices of organic acids,” Anpario explained.
High input costs lowered sales in Spain and Italy as well. In China, a 6% decline in sales was due to intermittent lockdowns because of covid19.
However, the company expects the Chinese economy to open up further in 2023, boosting sales in the country and the rest of the Asia-Pacific region.
Going forward, the company’s chair, Kate Allum, anticipates a few bumps ahead as avian influenza is affecting poultry worldwide, and trading in the first couple of months of 2023 remains weak.
Anpario also cited the strong dollar causing some developing countries to implement currency controls that restrict the level of trade the company can do with its customers.
Nevertheless, according to Ahkil Patel, equity research analyst at Show Capital, Anpario has a leading market position with products for the existing market as it targets new markets such as aquaculture.
Additionally, “demand for Anpario’s products could increase as the year progresses. Anpario will also become more resilient given its investment in a global sales team to deliver sales across new markets,” Patel added.