Executive Summary / Key Takeaways

• Strategic Pivot and Asset Divestment: Forafric Global PLC is undergoing a significant strategic transformation, shifting its core focus to the Moroccan soft wheat market and divesting non-core assets, including a durum wheat mill and a logistics subsidiary, with expected proceeds of $29 million by May 31, 2025.
• Market Leadership in a Growing Region: The company holds a leading position in the Moroccan wheat milling industry, boasting a daily processing capacity of 3,700 tons and strong brand recognition with MayMouna and Tria, poised to capitalize on Africa's substantial demographic growth and increasing urbanization.
• Pressing Liquidity Concerns: Despite strategic initiatives, Forafric faces "substantial doubt about the company’s ability to continue as a going concern" due to significant operating losses and a $42 million loan repayment demand in December 2024, necessitating successful execution of its divestment and financing plans.
• Mixed Financial Performance: For the year ended December 31, 2024, revenues from continuing operations decreased by 9.2% to $274.2 million, and net loss widened to $23.36 million, primarily impacted by decreased crushed volumes, increased energy costs, and asset impairments.
• Operational and Quality Differentiation: In a commodity-driven market, Forafric differentiates through established milling expertise, rigorous quality control, and an extensive regional logistics network, aiming for consistent product quality and efficient supply chain management.

A Staple in Africa's Growing Food Market: Forafric Global PLC's Enduring Legacy

Forafric Global PLC stands as a significant player in the agricultural commodities sector, deeply rooted in the purchase, storage, transport, processing, and sale of essential food products. With a history stretching back to the Tria Group's founding in Morocco in 1923, the company has evolved into a leader in the Moroccan milling industry, offering a comprehensive range of wheat flours, semolina, pasta, and couscous. Its products reach customers in approximately 45 countries across Europe, Asia, Africa, and the Middle East, underscoring its broad operational footprint.

The company's strategic positioning is underpinned by the robust and expanding African food market. The African population, estimated at 1.50 billion in 2025, is projected to reach 2.50 billion by 2050, accompanied by a significant increase in urbanization, which is expected to drive demand for more processed food products. Morocco, where most of Forafric's facilities and customers are located, exhibits particularly high wheat-based product consumption, ranking as the second highest globally at 200kg per person per year. This demographic and consumption trend provides a compelling long-term growth narrative for Forafric's core business.

Strategic Transformation: A Sharpened Focus on Morocco and Soft Wheat

In response to market dynamics and to strengthen its financial foundation, Forafric Global PLC initiated a pivotal strategic shift in November 2024, formally adopting a "new balance sheet strengthening strategy with a Morocco and soft wheat focus" in February 2025. This strategic pivot involves the divestment of non-core assets, specifically a durum wheat mill in Casablanca and a wholly-owned logistics subsidiary, Finalog. These divestments are anticipated to generate total proceeds of $29 million, with closings expected by May 31, 2025, and are crucial for improving the company's working capital position and overall balance sheet health.

The company's recent history reflects this strategic direction. In July 2023, Forafric acquired 90% of Societe Industrielle de Minoterie du Sud (SIMS), a soft wheat milling company in Marrakesh, significantly expanding its market share in Morocco to a target of 20% and establishing regional leadership. Additionally, a 10-year lease agreement for a mill in Meknes was signed in April 2024, further solidifying its operational presence in the key Moroccan market. This concentrated focus aims to leverage the company's established strengths and market position in its most profitable segments.

Competitive Landscape and Market Leadership

Forafric has cemented its position as a "leader in the Moroccan market" for wheat milling, boasting a substantial milling capacity of 3,700 tons per day as of December 31, 2024, an increase from 3,000 tons per day in 2023. In 2024, Forafric commanded an 11.05% share of the Moroccan crushing market, making it the second-largest player after IZDA. Its two main brands, MayMouna and Tria, are highly recognized in Morocco, with Tria holding approximately 15% of the overall couscous market, 28% in packaged couscous, and 9% in pasta.

The Moroccan flour market, however, is characterized by an imbalance of supply and demand, leading to intense price competition and pressure on margins. Forafric competes with established players like Moulins du Maghreb, Zine Cereales, Rica Maroc, Casagrains, and Dari Couspate (DCL). Globally, larger agribusinesses such as Archer Daniels Midland (ADM), Bunge Limited (BG), and Olam International represent broader competition. While these global giants benefit from immense scale and diversified operations, Forafric's competitive edge lies in its deep regional expertise, extensive distribution channels, and established export network across 45 countries. This localized focus allows Forafric to offer tailored products and potentially achieve faster market responsiveness in African markets, differentiating it from the more generalized approaches of its larger global counterparts.

Operational Excellence and Quality-Focused Differentiation

In an industry where raw material costs can account for up to 90% of total expenses, operational efficiency and quality control are paramount. Forafric's differentiation stems from its "milling know-how" and a production process meticulously "designed to achieve these goals" of providing high-quality, nutritious products. The company employs rigorous testing of raw materials at harvest time for protein quality, heavy metals, and pesticide residues, ensuring compliance with its stringent quality standards. This commitment extends through its cleaning, grinding, and conditioning stages, with continuous evaluation of finished products for grain size, protein level, humidity, and color, supplemented by bakery use tests.

While the company's disclosures do not detail proprietary, advanced technological machinery or specific R&D initiatives with quantifiable performance metrics, its operational strategy emphasizes process optimization and stringent quality assurance. This focus on consistent product quality and efficient processing, supported by a "unique storage infrastructure in Morocco" with 250,000 tons of grain storage capacity, serves as its core technological and operational differentiator. This approach aims to build brand loyalty and maintain market share by consistently delivering reliable products, which is critical in a staple food market.

Financial Performance: A Period of Reassessment

Forafric's financial performance for the year ended December 31, 2024, reflects a challenging period of strategic realignment and market pressures. Revenues from continuing operations decreased by $27.7 million, or 9.2% year-over-year, to $274.2 million. This decline was "primarily attributable to the decrease of crushed volume in both soft wheat and durum in Morocco." Cost of sales also decreased by 9.7% to $246.9 million, largely due to reduced crushed volumes, though increased energy costs impacted the soft wheat segment. Consequently, gross profit saw a 4.2% decrease to $27.3 million.

Operating loss from continuing operations significantly widened to $7.76 million in 2024 from $1.24 million in 2023. This deterioration was "primarily attributable to impairment of other assets for 5 million and the increase of activity in Western Africa." The net loss for the year widened to $23.36 million, compared to a net loss of $12.51 million in the prior year. The company's margins remain under pressure, as management notes, "as we cannot control the average selling price of our finished products, any increase in the cost of raw materials has a direct impact on our margins." The Moroccan government's continued subsidies on imported wheat in 2024 and 2025 have provided some relief on raw material costs.

Liquidity and Going Concern: A Critical Juncture

The company's financial health is at a critical juncture, with management identifying "substantial doubt about the company’s ability to continue as a going concern" as of April 30, 2025.

This assessment stems from significant operating losses and insufficient liquidity to meet obligations over the next twelve months. Cash and cash equivalents declined by $11.8 million, or 49% year-over-year, to $12.2 million at December 31, 2024, "primarily attributable to repayment of financial debt on wheat inventory."

A significant event in December 2024 was a demand letter from a lender requesting immediate repayment of two outstanding loan facilities totaling $42 million due to a shortfall in pledged inventory collateral. Management is actively engaged in discussions with the lender to resolve this, exploring options such as providing additional collateral or refinancing. The anticipated $29 million from the sale of non-core assets is a crucial component of management's plan to address these liquidity challenges and improve working capital.

Risks and Challenges

Forafric faces a multifaceted risk profile. The inherent volatility of agricultural commodity prices, particularly wheat, remains a primary concern, as "the international price of wheat is the main risk in our operations." Geopolitical events, such as the war in Ukraine, have already led to a 35% decrease in soft wheat availability and increased raw material costs. The company's dependence on Millcorp Geneve SA, a related party, for at least 80% of its annual wheat requirements, introduces supply chain concentration risk.

Regulatory risks in the highly controlled Moroccan market are also significant, including import restrictions on soft wheat and the impending disappearance of government subsidies on flour, which "may change the competition on the market." Furthermore, the company acknowledges vulnerabilities in its cybersecurity posture, noting a lack of formal written policies and procedures, which is particularly concerning given the accelerating frequency and impact of cyberattacks, especially with the rise of AI. The retention of key executives and employees, none of whom are subject to long-term written employment arrangements, also poses a risk to business continuity and growth.

Outlook: A Path to Stability and Growth

Forafric Global PLC's outlook is defined by its strategic pivot and the anticipated benefits of its asset divestment program. Management is "confident on the closing of the sale" of the durum wheat mill assets and the logistics subsidiary, which are expected to significantly bolster the balance sheet and working capital. This realignment towards the core Moroccan soft wheat business, where the company holds a leadership position and strong brands, is intended to streamline operations and enhance profitability.

While the company expects to "continue to operate at loss in the foreseeable future" and does not anticipate paying cash dividends, the long-term growth drivers in the African food market remain compelling. The increasing population and urbanization are expected to fuel demand for staple products like flour, semolina, pasta, and couscous. Forafric's focus on operational efficiency, quality control, and leveraging its established regional network positions it to capitalize on these trends, provided it successfully executes its balance sheet strengthening initiatives and effectively manages the inherent risks of commodity markets and regulatory changes.

Conclusion

Forafric Global PLC is at a transformative juncture, strategically shedding non-core assets to fortify its balance sheet and sharpen its focus on the high-growth Moroccan soft wheat market. This decisive pivot, coupled with its established leadership in a demographically expanding region, forms the core investment thesis. While the company grapples with significant liquidity challenges, including a recent loan repayment demand, the successful execution of its planned asset sales and ongoing efforts to secure additional financing are critical immediate catalysts for stabilizing its financial position.

Investors should closely monitor the completion of the divestitures and the company's ability to manage raw material price volatility and regulatory shifts in Morocco. Forafric's operational excellence and brand strength in its core market provide a foundational moat, but its path to sustained profitability and long-term value creation hinges on its capacity to navigate current financial pressures and fully realize the benefits of its concentrated strategic direction.