Consumer industries firm Ingrain has benefited from the disruptions caused by the Russian invasion of Ukraine and is gearing up to head north on the continent, says CEO Chris Wierenga, just two years after the company was acquired by Barloworld.
Bought from Tongaat Hulett in 2020 for R5.3bn, Ingrain has a diverse customer base supporting sales in the domestic market.
Among the largest producers of unmodified and modified starch, glucose and related products, Ingrain produces a wide range of products using maize as raw material.
Speaking on Barloworld’s pre-close trading update conference call, Wierenga said the business had settled well into Barloworld, producing a “better than expected performance”.
In the 11 months to August, Ingrain revenue was up 36.4% while operating profit lifted 40% due to increased sales volumes, improved co-product realisations and higher international soft commodity prices.
It said a focus on export sales had seen increased volumes made possible by increased production from Ingrain’s operations.
Wierenga said the group had seen higher volumes coming through in the domestic and regional markets, and was fortunate to have benefited from some of the global dislocations that occurred in recent months.
He added that over the period Ingrain was able to push through big price increases of 25%-30%, which came as a result of higher maize costs.
“We're exporting quite nicely into Australia where we have a presence, and then also into the south and eastern Asian segment where there’s quite a lot of demand for the product,” he said. “We're taking advantage of those opportunities.”
Looking ahead, he said over the next two to three years Ingrain would further unlock some of the plant capacity that it has through better maintenance. Some asset de-bottlenecking would also give the company access to even bigger volumes.
In the medium term, “we also see the opportunity to grow north of SA”, he said.
This would be accomplished through better customer penetration due to local sourcing in Africa for Africa.
Ingrain customers, despite the headwinds experienced, “do see future growth in SA and regionally”, he said.
In the domestic market, Ingrain reported that the alcoholic beverages sector continued its strong performance, while recovery in the confectionery and prepared foods sectors provided further support to domestic volume growth and offset the effect of softening demand from the coffee creamer sector.
Barloworld expects to release its annual financial results on Monday November 21.
By the JSE’s close on Monday Barloworld’s share price had gained 0.79% to R93, giving it a market value of R18.4bn.
gumedemi@businesslive.co.za
