Anpario (LON: ANP) has just announced its annual results. Sales have stopped growing, margins are down and profits cut. We could, if we wished, think about this as just something that has happened to a manufacturer of sustainable and natural animal feed products. But it's also an exemplar of an old economic truism. Sure, fashions exist, premium products that meet those fashions can be crafted. But straightened times mean a substitution back to basics.
That's the much larger lesson we should take from this in fact. Anpario's results are a lot less than anyone desires and again less than expected. But they're not in fact terrible “1% decrease in revenue to £33.1m (2021: £33.4m). 25% decrease in adjusted EBITDA1 to £5.2m (2021: £7.0m). 35% decrease in profit before tax to £3.7m (2021: £5.7m). Basic earnings per share down 30% to 16.13p (2021: 22.92p).” There are a lot of companies out there who would be happy only to have to deal with such a decline.
Anpario share price from
Of course shareholders might be less pleased about that.
But there's the wider lesson to be had here. Yes, of course everyone says that they'd like sustainable products. Natural too. And who could possibly believe that people would want anything but the best as animal feed? All of these things are most fashionable these days and as we know humans are just slaves to fashion.
However, such fashions - and yes, sustainable, natural, are only such, fashions - are what economists call luxury goods. Peopl
spend more of their income on them as their incomes rise. With the obvious implication that if incomes start to fall then people spend much less - a smaller portion of those lower incomes, not just marching in lockstep with lower incomes - on such fashionable items.
This is something we should carry across to our understandings of other players in this same space of green and sustainable fashion. Real incomes are falling across the US and Europe as inflation takes its bite. Therefore this new green economy is going to take a hit out of proportion to merely the decline in incomes.
We can worry about the problems at Anpario, of course we can, but the real issue is what it tells us about everyone else supplying into that oh so trendy and fashionable idea of sustainability.
