Adelaide based cattle producer, S. Kidman & Co has reported a solid after-tax profit of $9.7 million for the 2011-12 financial year.
The result was derived entirely from normal cattle operations, unlike the previous 2010-11 year’s unusually high profit of $20.4 million, which was impacted also by property disposal.
“This is another very pleasing result in what has turned into a run of good seasons,” company chairman John Crosby said.
Reflective of the solid herd rebuilding in recent years and earlier cattle acquisition activity, Kidman’s closing cattle herd size of 225,000 head is the largest held by the company since 1927, when the reins were still firmly held by Sir Sidney Kidman himself.
“Our usual workforce of 180 employees has professionally managed the bigger herd to the highest standards in the industry and we continue to deliver a world-quality food product into export markets,” Mr Crosby said in the company’s annual report.
He also noted that the outlook for the year ahead was favourable, with well-grassed country and a recently improved seasonal forecast for the summer across northern and central Australia.
The most immediate business risk was fire, Mr Crosby said.
“After losing almost 20 percent of the pasture base to fire last year, this again presents as the most immediate threat, despite a high level of preparation during winter,” he said.
The fire impact last year was particularly severe in the company’s channel country properties, where 30pc of Nappa Merrie and 25pc each of Durham Downs and Naryilco were lost.
Managing director Greg Campbell noted that the cattle industry continued to face a number of challenges which were beyond the control of individual producers.
The continuing high exchange rate, legacy political impacts on the Indonesian live export trade, slow progress with Free Trade Agreements with north-east Asian countries and the high cost and low availability of rural workers were the main challenges, he said.
“The Australian cattle industry is well familiar with the cycle of boom and bust, but in the current run of better seasons for parts of the industry, including Kidman’s, are quietly succeeding against the odds,” he said.
Looking back to this time last year, Kidman reported an after tax profit of $20.4m for the 2010-11 financial year. That was the biggest profit result seen since 2001, when a big season coincided with an exchange rate at about US55c – roughly half where it sits today. Contributing to the result in the 2010-11 year, however, was the sale of 12,000sq km Quinyambie Station near Broken Hill, which became surplus to Kidman’s requirements.
The profit results recorded this year and last are a big improvement on the earlier sequence of eight or nine dry years, where after-tax profits typically reached $5 million or less. Three years ago, for example, before seasons again started to turn favourable, the company recorded an after-tax profit of just $2.5m.