Ravensdown earnings surge as demand follows global commodity prices
By Jason Krupp
Aug. 10 (BusinessDesk) - Ravensdown Fertiliser Co-operative, which supplies close to half of New Zealand's agricultural fertiliser, has reported a 260% surge in full-year pretax operating earnings as farmers looked to boost the productivity of their fields to cash in on record agricultural prices.
Earnings rose to $71.6 million in the 12 months ended May 31, the farmer-owned co-operative said in a statement. Total revenue rose 12% to $933 million in the period, with New Zealand and Australian fertiliser sales up 14% to 1.5 million tonnes.
"The significant improvement in farming returns that we saw in the 2011 financial year led to farmers investing in fertiliser to improve production across all major sectors," said Ravensdown chairman Bill McLeod. "This investment has the potential to produce production increases for farmers in the short to medium term."
Ravensdown declared a $57 million distribution including imputation credits to shareholders, consisting of a cash rebate of $15.10 per tonne of fertiliser purchased, and a bonus share issue of 18 shares a tonne, valued at $26.86.
That's up from a $17 million total distribution in the previous year.
The improved performance comes after a challenging start to the year, when operations were impacted by severe spring weather, the Christchurch earthquakes in September and February, the co-operative said.
Ravensdown said trading conditions across the Tasman were also impacted by the drought in Western Australia and the flooding in Queensland at the beginning of the year, but both regions have subsequently rebounded strongly. The group's Australian operations reported an operating loss of $1.6 million, down from $11.2 million loss in the previous year.
During the period Ravensdown also purchased 50% stake in Direct Farm Inputs, a fertiliser operation in south-east Australia.
"Our Australian initiative is building the base from which we will deliver growth and financial return for shareholders in the longer term," McLeod said.
Cash flows in the period fell 90% in the year to $13 million, which was attributed to higher stock levels needed to cope with demand from Australian farmers who are in the middle of their fertiliser application season.
The cooperative also continued to invest in its manufacturing facilities in New Zealand, spending $3 million to improve the operating efficiency and environmental impact of the Ravensbourne works in Otago, and upgrade its stores in New Zealand and Australia.
Total assets rose by $95 million in the year to $786 million.