News

Record $14.1m profit for Ruralco

Beef Central, 18/11/2015

Ruralco Holdings yesterday reported a record net profit of $14.1 million for the full year ended 30 September.

The result compares to a profit of $10.6m for the previous year, and was driven primarily by the full year impact of acquisitions, together with strong agency market conditions.

Ruralco_Holdings_Logo_cmykIn a statement issued to the ASX, Ruralco’s newly appointed managing director and chief executive Travis Dillon, said the record results in both the first and second half of the year reflected the “quality and diversity of the Ruralco business.”

The successful integration of strategic growth acquisitions, the strong performance in the agency business and a stable rural supplies business had bolstered the group’s earnings, despite some challenging seasonal conditions, he said.

“Our live export business continues to increase capacity with growth in exports to Vietnam mitigating the impact of the reduced Indonesian permit allocations for feeder cattle and the collapse in the export dairy market earlier in the year,” Mr Dillon said.

Sales revenue for the year of $1.6 billion represented an 18 percent increase on the previous year, while gross profit of $307m was up 19pc.

Key items were:

  • Rural supplies increased gross profit by 4pc, with top line growth being achieved despite prolonged dry conditions throughout parts of Queensland, Victoria and Tasmania. These conditions did however put margins under pressure.
  • Agency activities increased gross profit by 18pc, headlined by an increase in livestock gross profit of 26pc above the previous year. This was driven by increases in volumes, customer penetration and strong prices that continued for most of the year. The continued high turn-off of livestock, strong international demand for Australian protein and low Australian dollar buoyed livestock and wool prices for the year.
  • Financial services increased gross profit by 2pc on the previous year, reflecting the growth in insurance revenue but a general softening in the insurance market continued to put pressure on premium prices.
  • Live export contributed $10 million in gross profit compared to $4.5m the previous year. The Frontier live export business continued to build scale with more than 132,000 head of cattle and sheep exported, despite challenging international market conditions in the first half. Frontier also continued to strategically support the Ruralco agency business by providing a steady pipeline of sales for livestock agents across the network.

With the leadership team renewal complete, the Ruralco board said it had taken the opportunity to evolve the strategy and has approved the future strategic direction for Ruralco, resetting the focus to leverage the network by building on maximising market share along the entire protein supply chain; and step change growth in financial services to support customers and the network.

Outlook

Ruralco’s strategy to diversify its platform was progressing well, shareholders were told, however performance would continue to be influenced by seasonal, market and international trade related factors:

  • Ongoing challenging seasonal conditions in certain regions would impact the cash flows of some farmers, potentially suppressing demand for inputs
  • Continuing low A$ was expected to be positive to all agricultural sectors with wool, grain, livestock and real estate all benefiting.
  • Live export business scaling up to a two vessel model from January 2016 with the opening of new markets into China, continued growth in Vietnam and a less volatile Indonesian market – all supporting a strong sales pipeline for the next 12 months.
  • Investor appetite for agricultural properties expected to continue and increased volume of transactions generally within the sector will continue to underpin the outlook for the rural property sector.

 

Source: Ruralco

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