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Record sales, profit and distribution by CRT

Record sales, profit and distribution by CRT

The South Island farmer owned co-operative CRT has announced a record result for the financial year ended 31 March 2006, with revenues of $431 million and a pre-tax profit of $5.8 million.

Announcing the result CRT Chairman Don McFarlane said CRT had performed very well in a market where rural spending was slowing and competition continued to strengthen. The board has resolved to distribute $4 million of the $5.8 million surplus to shareholders in a bonus rebate in August.

Growth in shareholder numbers is strong with numbers now exceeding 20,000 South Island farmers Mr McFarlane said. Farmer ownership of an entity of the size and scale of CRT fosters strong competition in the market, and in a year when the co-operative was well supported, the benefits of that success are returned to the shareholder customers he added.

Chief Executive Brent Esler said the total revenue of $431 million resulted from very good performance across all divisions of CRT, and in subsidiary companies CRT Real Estate Ltd and FarmDirect Ltd (a fuel distributor). This $42M growth in revenue achieved with an operating structure little different from previous years, resulted in the 82% increase in the surplus before tax. The profit of $5.8 million was the best ever reported, and CRT staff would take pride in being able to distribute $4 million to shareholders in a bonus rebate.

Mr Esler said CRT had more than 1,000 new shareholders added during the year, and the 20,000 mark was passed in May. Most of these would be well rewarded for their investment of $200 in voting share capital required to join CRT. The bonus rebate would reflect the individual members support of various segments within the CRT business.

For example, the calculation would result in a 2.5% bonus rebate on purchases through CRT FarmCentre, the retail arm of CRT, and 4% on CRT bulk fuel purchases through subsidiary FarmDirect. The remainder was derived from CRT Card, Seed, Feed and Ballance fertiliser purchases. Farmers participating at the average level in each business area would receive a bonus rebate of $555, and many will receive rebates of several thousand dollars.

The bonus rebate comes on top of $13.3M in rebates and loyalty rewards awarded to shareholders on a monthly basis during the year. “The major objective of CRT is to create competition in the farm inputs market, in both price and service, and to provide choice for farmers. Achieving this, and then returning such a high proportion of the surplus directly back to its farmer shareholders, rather than to passive investors, is the key point of difference for CRT and the co-operative model” Mr McFarlane said.

Whilst the bonus rebate distribution back to shareholders was significant, Mr Esler said CRT was also investing in business development, adding to its network of stores with 4 new stores opened between April and July this year. These openings were in areas where competition had been removed through mergers.

CRT had also made a significant acquisition with the March 2006 purchase of Cuddon and Stewart Ltd, a 70 year old Canterbury agribusiness icon. Further investments were made in store improvements, staff training and technology. CRT has continued to add to its highly regarded field force by attracting further specialists in the seed and dairy areas.

CRT is expecting a tougher year ahead, with its own fortunes reflecting the rural economy that it serves, and gains will only be possible through market share shifts. Strong competition is assured with new competitors entering the market, and existing competitors consolidating.

“In this environment it is even more important for strong farmer owned cooperatives like CRT to provide balance and choice in the marketplace for farmers” said Mr McFarlane.

ENDS

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