Ravensdown Delivers Outstanding Result
August 10, 2011
Ravensdown Delivers Outstanding Result While Building Strong Australian Operation
During a year in which Ravensdown Fertiliser Co-operative firmly established itself as a significant trans-Tasman supplier of major farm inputs, it delivered a pre-tax operating profit of $71.6 million for the financial year ending May 31, 2011, up 260% on 2010’s result.
Directors have declared a $57 million distribution (including imputation credits) to shareholders ($17 million in 2010), made up of a cash rebate of $15.10 a tonne of fertiliser purchased ($13) and a fully imputed bonus share issue of 18 shares a tonne valued at $26.86 (nil).
“As well as building a significant operation in Australia, we have delivered an outstanding financial result for shareholders,” said Bill McLeod, Chairman of Ravensdown.”
“Our Australian initiative is building the base from which we will deliver growth and financial return for shareholders in the longer term.”
“The immediate reward for shareholders is the highest distribution of cash and shares we have made in 14 years, and reflects the continued increase in the value of a shareholder’s investment in Ravensdown.
“In the past 10 years shareholder value has increased by $64 a tonne to $184.”
Mr McLeod said the foundation of the “positive result” was the strength of the New Zealand farming sector benefitting for the first time for many years from good commodity prices for meat, wool, dairy and arable produce.
“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.”
“This investment has the potential to produce production increases for farmers in the short to medium term.”
Total revenue for the co-operative increased by 12% to $933 million, and sales of fertiliser across the New Zealand and Australian markets increased by 14% to 1.492 million tonnes, with a significant portion of the Australian supply being manufactured in New Zealand.
Total assets grew strongly to $786 million, an increase of $95 million on the prior period.
“Our move into Australia makes balance sheet comparisons with prior years more difficult,” said McLeod.
“Our May balance date is in the middle of the Australian fertiliser application season, resulting in stock levels being much higher at this time of year than when we operated only in New Zealand.”
“While we remain focused on minimising working capital, we have also taken the opportunity to ensure that stock has been purchased to meet increasing demand. This has resulted in a reduced operating cash flow of $13 million compared with $131 million for the prior year.”
“Ravensdown has continued to invest in upgrading our manufacturing facilities in New Zealand, including $3 million to improve the operating efficiency and environmental impact of the Ravensbourne works in Otago, and to upgrade stores in New Zealand and Australia.”
Mr McLeod said Ravensdown’s New Zealand operations experienced an extremely challenging first half, being first affected by the significant storms that occurred in the spring of 2010, and then the debilitating impacts of the earthquakes in Canterbury in September and February.
“This challenging start to the year was compensated for by a second half buoyed by excellent growing conditions and good commodity prices.
“We established Ravensdown Shipping Services during the year to deliver significant efficiencies to our international logistics.”
Ravensdown’s business operations in Western Australia and Queensland experienced difficult trading conditions, but in spite of this financial performance improved with the previous year’s $11.2 million loss before tax and rebate being reduced to $1.6m.
“In Western Australia the droughts continued, breaking only after the end of our financial year. This had a negative impact on performance there.”
“In Queensland we had the opposite situation where we had the worst rainy period that growers could remember, resulting in a lot of sugar cane not being harvested and little fertiliser being applied.”
“Both of these regions have bounced back post balance date and we are looking forward to another substantial improvement in our Australian financial performance in the 2012 financial year.”
During the year Ravensdown purchased 50% of Direct Farm Inputs, a fertiliser operation in south-east Australia.
“In the second half of the financial year there was growing confidence in farming in New Zealand and Australia, driven by improved climatic and economic conditions,” said McLeod.
“This bodes well for our customers and our co-operative in the current financial year.”