Seprod Boast Robust Earnings For the FY Ending December 2023

• Building on the momentum gained from the A.S. Bryden Holdings (ASBH) acquisition in June 2022, Seprod reported $5.45Bn in net profit attributed to shareholders for the year ended December 2023, an 86.8% surge (or $2.53Bn) in profitability compared to the prior year.
• Revenues amounted to $113.04Bn, a substantial 44.1% (or $34.61Bn) increase, compared to the $78.43Bn in 2022. The acquisition of a majority shareholding in A.S Bryden in June 2022 significantly influenced the Group’s 2023 results. Notably, the inclusion of 12 months of ASBH results compared to 7 months in 2022 has bolstered overall performance.
• The business also benefited from a 45% increase in export sales and significant progress in the modernisation of its margarine plant, leading to enhanced availability of key shortening and margarine products.
• However, direct expenses jumped 50.4% (or $28.3Bn), causing the gross margin to fall to 25.3% of revenues from 28.4% in 2022. The growth in costs was directly associated with the increased revenue generation as well as higher commodity prices. 
• Despite the prevailing uncertainties in the operating market, management is maintaining a positive outlook for the company and remains focused on several strategic initiatives aimed at delivering outstanding results. These initiatives include deepening technology integration across the business to drive efficiency and productivity, targeting growth in exports by at least 40%, prioritising the upskilling of human capital, and extracting synergies from the ASBH acquisition.
• After rising 13.7% in 2023, Seprod’s stock price has appreciated a further 5.0% since the start of 2024 and closed Monday’s trading session at $83.70 per share. At this price, the stock trades at a P/E of 23.0x, which is above the Main Market Distribution & Manufacturing sector average of 15.6x.

(Sources: JSE & NCBCM Research)