CPC logs strong rise in profitability for 2014-15 fiscal year

Beef Central, 06/07/2015

CONSOLIDATED Pastoral Co has logged a strong financial performance for its 12 months ended 31 March, with revenue up 38 percent on the previous year to $88.5 million and pre-tax earnings up almost $22 million, from close to zero in 2014.

CPC new, with missionThe nation’s largest privately-owned cattle producer posted a net profit of just under $1 million, compared to a $26m loss a year earlier, and reported total assets at year’s-end of $735m.

CPC chief executive Troy Setter said the company’s strong FY15 financial performance reflected the substantial progress made during the year to increase productivity and reposition the business from a cattle production focus to becoming an integrated global beef and cattle supplier and marketer with a strong focus on the developing markets of Asia.

Troy Setter

Troy Setter

Terra Firma-owned CPC’s results were driven by its business operations and not from land revaluations, he said.

“CPC is extremely well placed to benefit from the favourable industry dynamics driving global beef markets and is already seeing the benefits from recently completed Free Trade Agreements,” Mr Setter said.

“The demand for cattle and beef continues to increase while global beef herds continue to decline, providing significant upside for CPC.”

“It’s a very exciting time in the Australian beef and cattle industry,” Mr Setter said.

“We continue to see hard evidence of ever-increasing demand from our Asian neighbours seeking high-quality Australian beef. As one of Australia’s largest cattle and beef producers with integrated offshore operations, CPC is well positioned to capitalise on the opportunity to secure a meaningful proportion of rising Asian demand,” he said.

“This is certainly the most exciting period I have ever seen in my career in the beef industry based on demand and price,” Mr Setter said.

“The EYCI at 534c/kg is 190c/kg higher than it was a year ago. We are also still in a substantial drought and we haven’t seen the impact of the drought breaking as yet.”

Operational highlights included the acquisition of Bunda Station completed in February (click here to view Beef Central’s earlier story), bringing CPC’s portfolio to 20 stations comprising 5.7 million hectares of land.

Cattle numbers rose 3pc during the financial year recently completed to 384,000 head, reflecting CPC’s commitment to developing a genetically superior and self-sustaining herd, a statement said.

Indonesian operations strengthened, moving CPC closer to its goal of becoming a highly-diversified and vertically integrated producer and supplier of premium quality Australian cattle and beef to international markets.

A feature of the CPC results lodged with ASIC was a $1m reduction in personnel expenses. Staff numbers across the group fell by 20pc over the past year, while the group employed more contractors and rationalised its management team. Lower freight costs also contributed.

Bank loans from Rabobank and ANZ grew to $297.5m from $269.5m a year ago but CPC’s gearing remains below 50pc.


Equity injection likely

The Australian this morning suggested CPC was preparing to issue $300 million in shares to a strategic investor.

The move to raise new equity came after CPC received several inbound approaches from Chinese players last year.

While Mr Setter declined to comment on the process, it is understood CPC received about 90 expressions of interest in taking a position in the business.

Those have now been streamlined to as few as four, The Australian suggested. One is said to be Chinese, while at least one other is believed to be a local player. The final partner is not expected to be finalised for at least two months. CPC had identified a pipeline of opportunities in which to invest funds from the raising, including further developing its existing properties. There could also be acquisitions of property in Australia as well as potentially feedlots and even meat businesses, The Australian said.

Mr Setter declined to comment on the S. Kidman sale process, but said there was no direct link between CPC’s equity raising and the Kidman divestment.

CPC is believed to be in advanced negotiations to increase its stake in its Indonesian joint venture from 50pc to 80pc, which would move it closer to its goal of becoming a diversified and vertically integrated producer and supplier of premium Australian cattle.


About CPC:

Consolidated Pastoral Co is Australia’s largest privately owned cattle producer. The company owns and operates a portfolio of 20 cattle stations comprising more than 57,000sq km of land in Queensland, the Northern Territory and Western Australia.

The company also holds a 50pv interest in a joint venture which owns and operates two feedlots in Indonesia. CPC direct sales channels primarily involve selling cattle and beef to Asian consumer markets, domestic feedlots or processors, and exporting live cattle.


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