Zagro rides on agri boom – 1H FY2008 net earnings vaulted by 91%

Net earnings of life sciences specialist and SGX Mainboard-listed Zagro Asia Limited (“Zagro” or “The Group”) soared by 91% in the first half of FY2008, from $3.1 million to $5.8 million as revenue surged by 30% to $69.5 million, from $53.3 million a year ago.

Zagro’s excellent performance was a result of the rising market prices for agricultural produce and its ability to procure raw materials and intermediates at competitive rates.

Financial Summary

Overall Highlights
(S$)

1HFY08

1HFY07

%
Change

Turnover
69.50 m

53.30 m

30%

Profit before taxation
8.00 m

4.30 m

85%

Net Profit attributable
to shareholders
5.80 m

3.10 m

91%

Earnings per share
2.26 cent

1.19 cents

90%

Mr Poh Beng Swee, Chairman and CEO of Zagro Asia said, “This year is set to be a record year for the Zagro Group as we benefit from record prices of agri-related products. Most of our core overseas markets, including Malaysia and Thailand recorded excellent sales growth and this upward trend is expected to continue in
the year ahead.”

Zagro’s acquisition of Novartis’ Ectoparasiticide brand, Neocidol® and Steladone®, continued to contribute to both top and bottom lines and by next year, contributions from its recent purchase of BASF (Taiwan) animal nutrition unit will come on stream.

Earnings per share climbed 90% from 1.19 cents to 2.26 cents while net asset value per share rose by 4.2% from 19.79 cents to 20.62 cents. The Group continued to generate positive cashflow from its operating activities, with net operating cashflow standing at $1.1 million, despite an increased build-up of inventory levels in anticipation for soaring demand for the Group’s crop as well as animal nutrition and protection products.

Gross margin rose substantially from 22.3% to 26.9% as a result of the Group’s improved sourcing abilities, coupled with stronger branding and increased product registrations. Among the business segments, Crop Nutrition was the star performer, followed by Animal Nutrition.

Moving ahead this year, the Group expects to perform significantly better than the previous year. Mr Poh added, “We expect agflation, or agricultural price inflation, to continue into the next two quarters of 2008. If prices remain robust and we are able to continue to manage our procurement costs as we do now, the Group will continue to be a beneficiary of this phenomenal boom in the agriculture sector.”

“To steer Zagro to the next height of development, we are continually evaluating strategic acquisitions and alliances that will allow the Group to extend its global footprint and penetrate new markets that will also provide Zagro the platform to expand the depth and breadth of its product portfolio,” Mr Poh said. To date Zagro’s
distribution network spans across more than 50 countries globally.

About Zagro Asia Limited

Listed on the Singapore Stock Exchange since 1996, the Zagro Group is one of the leading Asian manufacturer and distributor of agricultural products for livestock, poultry, aquatic animals and crops.

The Group is engaged in the manufacture and distribution of a wide range of nutrition and protection products for livestock, aquatic animals and crops. Zagro is actively involved in end-user marketing and distribution across many regions worldwide.

Overall Highlights (S$)	1HFY08	1HFY07	% Change
Turnover	69.50 m	53.30 m	30%
Profit before taxation	8.00 m	4.30 m	85%
Net Profit attributable to shareholders	5.80 m	3.10 m	91%
Earnings per share	2.26 cent	1.19 cents	90%