Farmlands Predicts Further Growth
for release Oct 15 2003
Predicts Further Growth
-$4 million profit on record membership
Strong buying power backed by record membership has retail co-operative Farmlands placed to gain market share on a more positive rural outlook.
Farmlands Chief Executive John Newland today announced a $4 million profit after tax for the financial year ending 30 June 2003 on sales of $260 million. Shareholder funds increased $2.4 million after a $2 million bonus rebate, increasing equity to $24.5 million.
This profit result is the same as last year however sales fell $22 million on 2002.
“We did not let a difficult year undermine our business. Sales were down, but we retained our ability to grow,” Mr Newland said.
“A key performance driver was our record 16,000 members. Another 950 people joined Farmlands this year telling us we are gaining market share against larger national rural service companies
“When farming gets tough – farmers turn to cooperatives. This unrelenting, self determination to be part of a company set up ‘by farmers, for farmers’ to achieve the cheapest rural supply costs is giving us a competitive advantage.”
“Our research into Taranaki this year, told us farmers welcomed fresh competition in the rural retail sector and favoured co-operative ownership.
“When Farmlands new Stratford store opens in December and we expect it to become a multi-million dollar business, owned and supported by local members,” Mr Newland said
Retiring chairman David Ritchie, who has spent 17 years as a director and has been a member of Farmlands for nearly 30, said the co-operative movement is built on retaining the interest and trust of members.
After 41 years Farmlands is an example of what can be achieved. Six farmers believed that there was an opportunity to establish a co-operative for mutual benefit and challenge the competition.
Farmlands’ business is widely diverse with an operation that has considerable flexibility in its services, and a membership that has a much wider range of purchasing requirements
A co-operative must demonstrate that the reason to exist is to add value to the members’ business
This year Farmlands’ star performer has been the company’s charge card service Farmacard, which generated a record $97 million sales - up $7 million on last year. Farmacard’s mainstreet agencies grew by nearly 200 to over 2300, along with fuel, electricity, insurance and telecommunications card sales.
Retail store sales were marginally back but sales for seed, apparel, irrigation equipment and domestic supplies increased significantly.
A major fertiliser supplier’s decision to sell directly to farmers saw fertilser sales fall $23 million. Despite this, the company recorded excellent fertiliser sales of more than $40 million.
Mr Newland said early on Farmlands knew it faced a very challenging year.
“We had raised the bar, setting higher targets on the back of the last year’s record sales but farmers had cut their spending.
“We worked closely with our suppliers and this strengthened our co-operative buying power.
“This year has reinforced the importance of our supplier relationships, and that we must never underestimate their value and significance,” Mr Newland said.
Another highlight has been “the store within a store” marketing concept with the successful launch of PremierPetz as New Zealand’s first retail chain of nutritional products for household pets.
Farmlands also invested in major store expansions in Otaki and Wanganui, and another is underway in Napier.