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Ballance delivers record breaking performance

30 July 2014

Ballance delivers record breaking performance

Rural sector confidence has translated into record revenue and sales volumes for farm nutrient co-operative Ballance Agri-Nutrients, leading to a record $78.9 million distribution to shareholders.

The distribution combines a rebate averaging $60.83 per tonne on fertiliser purchases, and a fully imputed dividend of 10 cents per share which adds a further $4.17 per tonne to the distribution. At $65 per tonne it matches last year’s record. With the rebate covering higher fertiliser volumes, the total distribution is 21% higher than last year’s $65 million. Returns to shareholders vary according to tonnages and products purchased, but as an example a fully paid up shareholder buying 100 tonnes would receive $6,500 in mid-September.

Ballance Chairman, David Peacocke, said the co-operative’s excellent performance and its very strong balance sheet means it can pass more of its profits on to shareholders and retain a smaller share for reinvestment.

On a like-for-like basis, Ballance’s result was a new record at $93.5 million, ahead of last year’s $92.6 million. This result is before one-off restructuring costs related to the decommissioning of the Whangarei plant of $4 million, which when included means the Group trading result is $89.5 million.

Revenues were also a record at $921 million for the year ended May 31, 2014, compared with the prior year’s $878 million. Sales volumes were 1.55 million tonnes compared with 1.33 million last year.

Mr Peacocke said the results underline both rural sector confidence and the financial strength of the co-operative.

“Demand lifted during the year with forecasts for a high dairy payout, improving red meat returns, more maize crops and farmers moving to improve pastures after drought conditions. We capped off the year with very good autumn conditions which saw demand reach a peak, driving an upturn in year-end sales.”

The outstanding performance was achieved in a year where the business lost one month of urea production during the closure of its Kapuni plant for maintenance and capital improvements totalling $21 million.

“Even with these financial hurdles, we crossed the finish line with a great result and our largest total return to shareholders to date.”

Mr Peacocke said that the co-operative’s combined approach to fertiliser, feed and farm technology was getting results on the farm too, evident in shareholder numbers with nearly 1000 new shareholders signing up.

“They are telling us they like our whole-of-farm approach to nutrients and that we give them expert, science-based advice. In addition to rebates, for example, our shareholders have free access to our Ag Hub online farm management system. We have also turned in some very consistent performances and rebates and that has not gone unnoticed.”

Ballance Chief Executive Larry Bilodeau says delivering a series of personal bests on the eve of his retirement is satisfying.

“Our strong supply relationships enabled us to source product very competitively throughout the year and maintain our focus on keeping fertiliser prices low in a volatile market. We passed on those savings to farmers when global prices allowed us to.”

Mr Bilodeau maintained the company’s strong financial position, turning last year’s modest $6 million net debt to a $28.3 million cash positive position. Ballance’s equity ratio sits at 70.9%, similar to last year’s record 71.2%.

“We’ve upheld our disciplined approach to cost management right across the business, keeping overall costs under control and continually improving our operations by finding new efficiencies wherever possible.

“What’s very gratifying is that we were able to achieve a net cash position at year-end while keeping up investments in our operations and in research and development. In addition to improvements at Kapuni we invested $10 million to boost feed production and distribution capability at SealesWinslow, and completed several million dollars of improvements at our distribution centres.

“Our very strong balance sheet sets us up well to take advantage of the many opportunities that lie ahead.”

Mr Bilodeau, who this month was named Federated Farmers 2014 Agri-businessperson of the Year, will retire following Ballance’s annual meeting of shareholders in Queenstown on September 24. Ballance has appointed Mark Wynne as his successor.


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