Ruralco Holdings Limited has advised the Australian Stock Exchange that it expects the company’s reported net profit after tax for the full year ended September 30 to be in the range of a breakeven result and a loss of $1 million.
This compares to a profit for the corresponding period of $13.8 million and follows a net loss after tax in the first half of the 2013 financial year of $500,000.
In a statement to the ASX Ruralco managing director John Maher said strong progress continued to be made on the delivery of Ruralco’s strategic agenda which was focused on diversifying and growing the business geographically by product and service.
“While the business has performed credibly in terms of activity volumes and cost management, performance was impacted by markedly lower livestock commodity prices and reduced first half agricultural chemical sales, a product of hot and dry seasonal conditions during the first half.
“Pleasingly, rural supplies returned a solid second half performance and an increase in full year gross profit.”
“Although we have seen some recovery in sheep and lamb indicator prices in the second half, beef prices remain under pressure due to reduced rainfall and feed levels in northern Australia, and parts of eastern Australia.
“As a result the predominance of underweight stock exacerbated by reduced marketing outlets in these northern areas, has impacted commission revenues for much of the year.
“While the Agfarm grain business was unable to repeat its record prior year performance with grain tonnes marketed 23pc below pcp, the result was consistent with wider industry experience for the 2012/13 harvest when high international grain prices strongly favoured participants operating in the cash sale market, relative to providers of pooling and managed sale products.”
In addition to the solid performance rural supplies, Mr Maher said the company expected to report steady or increased gross profit contributions on the pcp in wool, real estate, general insurance and water solutions.
Ruralco’s 2013 reported net profit after tax is anticipated to include approximately $9m of non-recurring items with the major cost ($7m) being the mark-to-market write down of Ruralco’s investment in Elders Limited and costs associated with its proposed acquisition of Elders Rural Services.
The balance of the one-off impacts (net $2m) include redundancy costs associated with operational costs savings and back office consolidation strategies, inventory write-downs arising from our discontinued hardware importing business and an investment valuation gain on our 50pc stake in Agfarm.
To view Ruralco's full statement to the ASX click here