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Broiler industry contributes 0.71% to GDP in 2017

Broiler industry contributes 0.71% to GDP in 2017

Despite the uncertainty around the current legislation, Namibia’s broiler industry has performed exceptionally well, contributing 0.71% to Namibia’s overall Gross Domestic Product.

This is according to an economic impact assessment report commissioned by the local poultry association and conducted by Cirrus Capital. The firm stressed that while the 0.71% figure may seem insignificant, it is important to note that the Namibian economy has grown on average 4.05% a year since 1990.

Therefore, Cirrus Capital is of the view that the Namibian broiler industry has great potential for the country in terms of job creation, food security, and industrialisation, but it faces many challenges.

Currently the industry has the benefit of import restrictions, a measure aimed at establishing a local industry, however the South African Poultry Association has dragged the matter to court where it is currently bogged down. Membership of the Southern African Customs Union also makes dealing with anti-competitive behaviour and dumping very difficult.

“Uncertainty around the current legislation hampers the development of the industry, as new entrants fear their investment may be jeopardized,” Cirrus Capital said in a statement this week.

According to Cirrus, the industry could grow to 2% under the right conditions including clear, concise and supportive legislation and increased consumption of poultry products.

Namibia lags far behind South Africa in annual per capita consumption of chicken, with roughly 13kg consumed locally compared to South Africa’s 38kg. Local consumption stands at 2 500 tonnes per month, of which Namibia produces 1 900 (67%). Restrictions limit imports to a maximum of 1 500 tonnes per month, but the current protection sees importers trying to obtain the most quota instead of joining the local industry and moving from imports to local poultry purchases.

A survey conducted in the retail market shows that the shelf price of imported poultry products is only slightly lower than that of local products (or in some instances more expensive), thus the benefit of imported poultry does not pass through to the consumer.

The domestic market has also ensured other types of poultry products, including fresh chicken, chicken livers, cleaned feet, etc., could enter the Namibian market. Many of these products are very cheap sources of protein for Namibian households.

“Domestic demand for chicken meat is on the rise and the increase in demand is currently catered for by imports. However, local SMEs have started adding capacity too and Namibia could be self-sufficient by the end of 2019,” Cirrus Capital added.

Production input costs are higher in Namibia than South Africa, and Namib Poultry Industries (NPI) has streamlined its processes to be exceptionally efficient as the risk of water shortages in the long term has been reduced by the investment of N$11 million in a reverse osmosis filtration system.

“NPI directly contributed N$201 million to the Namibian economy in its 2017 financial year or 0.12% of the GDP. The local industry also contributed indirectly through its input purchases and employment, as well as by substituting local production for what would otherwise be imported. Taking these into account, the total contribution in 2017 amounts to N$888 million or 0.71% of GDP. While this figure may seem insignificant, the Namibian economy has grown on average 4.05% a year since 1990. This means that NPI alone makes up around 18% of a single year’s growth,” Cirrus reported.

The firm stressed that it is important that the industry is supported and developed further, adding that without a supportive legislative framework, it remains risky for new players to enter the market.

“Government must catch up with private sector development in terms of the legislation it writes and the finalisation of the Namibia Board of Trade Bill,” Cirrus Capital urged.

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Sanlam 2018 Annual Results

7 March 2019


Sanlam’s 2018 annual results provides testimony to its resilience amid challenging operating conditions and negative investment markets

Sanlam today announced its operational results for the 12 months ended 31 December 2018. The Group made significant progress in strategic execution during 2018. This included the acquisition of the remaining 53% stake in SAHAM Finances, the largest transaction concluded in the Group’s 100-year history, and the approval by Sanlam shareholders of a package of Broad-based Black Economic Empowerment (B-BBEE) transactions that will position the Group well for accelerated growth in its South African home market.

Operational results for 2018 included 14% growth in the value of new life insurance business (VNB) on a consistent economic basis and more than R2 billion in positive experience variances, testimony to Sanlam’s resilience in difficult times.

The Group relies on its federal operating model and diversified profile in dealing with the challenging operating environment, negative investment markets and volatile currencies. Management continues to focus on growing existing operations and extracting value from recent corporate transactions to drive enhanced future growth.

The negative investment market returns and higher interest rates in a number of markets where the Group operates had a negative impact on growth in operating earnings and some other key performance indicators. This was aggravated by weak economic growth in South Africa and Namibia and internal currency devaluations in Angola, Nigeria and Zimbabwe.

Substantial growth in Santam’s operating earnings (net result from financial services) and satisfactory growth by Sanlam Emerging Markets (SEM) and Sanlam Corporate offset softer contributions from Sanlam Personal Finance (SPF) and Sanlam Investment Group (SIG).

Key features of the 2018 annual results include:

Net result from financial services increased by 4% compared to the same period in 2017;

Net value of new covered business up 8% to R2 billion (up 14% on a consistent economic basis);

Net fund inflows of R42 billion compared to R37 billion in 2017;

Adjusted Return on Group Equity Value per share of 19.4% exceeded the target of 13.0%; and

Dividend per share of 312 cents, up 8%.

Sanlam Group Chief Executive Officer, Mr Ian Kirk said: “We are satisfied with our performance in a challenging operating environment. We will continue to focus on managing operations prudently and diligently executing on our strategy to deliver sustainable value to all our stakeholders. The integration of SAHAM Finances is progressing well. In addition, Sanlam shareholders approved the package of B-BBEE transactions, including an equity raising, at the extraordinary general meeting held on 12 December 2018. Our plan to implement these transactions this year remains on track.”

Sanlam Personal Finance (SPF) net result from financial services declined by 5%, largely due to the impact of new growth initiatives and dampened market conditions. Excluding the new initiatives, SPF’s contribution was 1% down on 2017 due to the major impact that the weak equity market performance in South Africa had on fund-based fee income.

SPF’s new business sales increased by 4%, an overall satisfactory result under challenging conditions. Sanlam Sky’s new business increased by an exceptional 71%. Strong growth of 13% in the traditional individual life channel was augmented by the Capitec Bank credit life new business recognised in the first half of 2018, and strong demand for the new Capitec Bank funeral product. The Recurring premium and Strategic Business Development business units also achieved strong growth of 20%, supported by the acquisition of BrightRock in 2017. Glacier new business grew marginally by 1%. Primary sales onto the Linked Investment Service Provider (LISP) platform improved by 5%, an acceptable result given the pressure on investor confidence in the mass affluent market. This was however, offset by lower sales of wrap funds and traditional life products.

The strong growth in new business volumes at Sanlam Sky had a major positive effect on SPF’s VNB growth, which increased by 7% (14% on a comparable basis).

Sanlam Emerging Markets (SEM) grew its net result from financial services by 14%. Excluding the impact of corporate activity, earnings were marginally up on 2017 (up 8% excluding the increased new business strain).

New business volumes at SEM increased by 20%. Namibia performed well, increasing new business volumes by 22% despite weak economic conditions. Both life and investment new business grew strongly. Botswana underperformed with the main detractor from new business growth being the investment line of business, which declined by 24%. This line of business is historically more volatile in nature.

The new business growth in the Rest of Africa portfolio was 68% largely due to corporate activity relating to SAHAM Finances, with the East Africa portfolio underperforming.

The Indian insurance businesses continued to perform well, achieving double-digit growth in both life and general insurance in local currency. The Malaysian businesses are finding some traction after a period of underperformance, increasing their overall new business contribution by 3%. New business production is not yet meeting expectations, but the mix of business improved at both businesses.

SEM’s VNB declined by 3% (up 6% on a consistent economic basis and excluding corporate activity). The relatively low growth on a comparable basis is largely attributable to the new business underperformance in East Africa.

Sanlam Investment Group’s (SIG) overall net result from financial services declined by 6%, attributable to lower performance fees at the third party asset manager in South Africa, administration costs incurred for system upgrades in the wealth management business and lower earnings from equity-backed financing transactions at Sanlam Specialised Finance. The other businesses did well to grow earnings, despite the pressure on funds under management due to lower investment markets.

New business volumes declined by 13% mainly due to market volatility and low investor confidence in South Africa. Institutional new inflows remained weak for the full year, while retail inflows also slowed down significantly after a more positive start to the year. The international businesses, UK, attracted strong new inflows (up 57%).

Sanlam Corporate’s net result from financial services increased by 4%, with the muted growth caused by a continuation of high group risk claims experience. Mortality and disability claims experience weakened further in the second half of the year, which is likely to require more rerating of premiums in 2019. The administration units turned profitable in 2018, a major achievement. The healthcare businesses reported satisfactory double-digit growth in earnings, while the Absa Consultants and Actuaries business made a pleasing contribution of R39 million.

New business volumes in life insurance more than doubled, reflecting an exceptional performance. Single premiums grew by 109%, while recurring premiums increased by a particularly satisfactory 56%.

The good growth in recurring and single premium business, combined with modelling improvements, supported a 64% (71% on a comparable economic basis) increase in the cluster’s VNB contribution.

Following a year of major catastrophe events in 2017, Santam experienced a relatively benign claims environment in 2018. Combined with acceptable growth in net earned premiums, it contributed to a 37% increase in gross result from financial services (41% after tax and non-controlling interest). The conventional insurance book achieved an underwriting margin of 9% in 2018 (6% in 2017).

As at 31 December 2018, discretionary capital amounted to a negative R3.7 billion before allowance for the planned B-BBEE share issuance. A number of capital management actions during 2018 affected the balance of available discretionary capital, including the US$1 billion (R13 billion) SAHAM Finances transaction. Cash proceeds from the B-BBEE share issuance will restore the discretionary capital portfolio to between R1 billion and R1.5 billion depending on the final issue price within the R74 to R86 price range approved by shareholders.

Looking forward, the Group said economic growth in South Africa would likely remain weak in the short to medium term future, and would continue to impact efforts to accelerate organic growth. The outlook for economic growth in other regions where the Group operates is more promising. Recent acquisitions such as the SAHAM transaction should also support operational performance going forward.

“We remain focused on executing our strategy. We are confident that we have the calibre of management and staff to prudently navigate the anticipated challenges going forward,” Mr Kirk concluded.

Details of the results for the 12 months ended 31 December 2018 are available at