THE nation’s second largest beef producer, Consolidated Pastoral Co this morning announced a solid $49.7 million pre-tax profit for its 2016-17 financial year ended 31 March.
Revenue of $154.6m was down 6.2 percent on the previous year, reflecting the company’s smaller cattle herd due to drought.
The record pre-tax earnings figure (not including property revaluation) was up 31.5pc on the previous year, while the after-tax profit of $37.1m was up 83pc, year-on-year.
Following a property revaluation, total assets at year’s end reached $880.5m, up 12pc on the 2016 year.
Owned by UK’s Terra Firma fund, and locally run, CPC owns and operates a portfolio of 16 cattle stations with a carrying capacity of over 400,000 head of cattle across more than 5.5 million hectares of land in northern Australia.
Chief executive Troy Setter said the solid earnings performance reflected sustained high cattle values, along with productivity improvements delivered across the business over the previous 12 months.
“With our geographically-diverse properties and self-sustaining herd, CPC is well positioned to benefit from strong global demand for beef,” he said.
“We continue to see positive outcomes through the ongoing transformation of CPC from a cattle producer to an integrated premium quality beef and cattle supplier to international markets.”
The company’s majority ownership of JJAA, which owns and operates two feedlots in Indonesia, was providing valuable vertical integration and direct access to Australia’s largest cattle export market.
“There is significant upside potential from ongoing investments in our properties as well as productivity improvements from our leading genetics program,” Mr Setter said.
The growth in total asset value reflected the quality of CPC’s properties and a continued focus on portfolio optimisation and capital reinvestment, he said.
Sale of assets frees up capital for development
During the year, CPC divested five properties, leased one back and continued to employ a conservative methodology to asset valuation during the year. Sales included Humbert River (Northern Territory), Mount Marlow, Gowan and Cooinda (Queensland), as well as sale and leaseback of Carlton Hill Station in Western Australia’s northeast. The sales of Humbert River plus the three Queensland holdings realised just over $30 million, while the sale/ten-year term leaseback of Carlton Hill was worth $100m to CPC.
“The work we have done over recent years including investments in our properties, our cattle and our team, positions the business well for the future,” Mr Setter said.
Funds from those sales are being redirected into substantial productivity improvements on existing properties, including water and fencing infrastructure. Some of that is simply reducing grazing radius to 3km, rather than adding fencing.
Effectively, CPC has identified more development potential on remaining properties than the ‘foregone’ carrying capacity lost in the four properties sold this past year.
It anticipates the projects ending next year will deliver an additional 30,000 head of capacity to the company, in a typical season. Most of the development work will be directed into the company’s larger NT and Qld properties.
The ‘intensification’ part of the redevelopment started last year and will continue through 2017 and into 2018.
Other operational highlights included the acceleration of CPC’s world-class genetics program, with a strong focus on increasing profitability through every stage of the value chain; and commitment to long-term sustainable use of land and waterways, with continual investment in the development and improvements of the properties, including completion this year of the six-year Lake Woods Biodiversity project to control the woody weed, Parkinsonia.