CRT Sustains $800m Turnover Despite Recession

CRT Sustains $800m Turnover Despite Recession

Farmer owned co-operative CRT has recorded turnover in excess of $800 million for the second year despite a turbulent economic environment. Turnover grew by 39% to $802 million in the 2009 financial year, and retaining the same level of sales for the year ended 31 March 2010 was a significant achievement.

In announcing the result, CRT chairman Don McFarlane said achieving a total turnover of $801m was a very good result at a time when most areas of agriculture had been under significant cash flow pressure during the year in line with the general global economic climate.

“While the sheep and beef sector enjoyed slightly better prices than in the past, many farmers were unable to take advantage of these because of the extremely dry summer conditions in the South Island,” Mr McFarlane said. “A lack of confidence was evident in the dairy, arable and horticulture sectors with volatile movements in their prices and returns so in this environment we are satisfied with our performance.”

The result also demonstrates the strength in the diversity of CRT’s business as some areas of the business, notably CRT Card and CRT Fuel, continued to enjoy strong growth. New business streams in finance and livestock performed well, with livestock contributing positively in its first eight months of operation.

The difficult trading conditions and different sales mix reduced the operating surplus of CRT to $5.1 million, down from a record $12 million the previous year. A sudden and severe slump in grain pricing during the year affected trading profits, margins in the feed business and closing stock values. On a positive note, the beneficiaries were CRT’s arable farmer shareholders who were contracted to supply grain to CRT at record prices during 2008.

CRT will provide a bonus rebate distribution to shareholders of $3.45 million from the $5.1 million operating surplus. This will be in addition to the total of $22.1 million in monthly rebates and $2.42 million in CRT Choices Rewards points awarded during the year. These benefits totalling almost $28m represent a sound return to the co-operative’s shareholders. CRT continues to fulfil its co-operative objective of providing competition to reduce the cost of rural supplies for its members.

CRT total assets grew 11.5% to $153 million in the year, and shareholder numbers grew 2.8% to 24,655 members. The co-operative developed additional new business to livestock and finance by acquiring the fuel distribution business of Bushetts and VJs in the Hawkes Bay region. Negotiations were also concluded for further growth with CRT Fuel acquiring the licence for the Challenge brand and taking over national distribution to the Challenge retail fuel station network. These moves have provided CRT Fuel with a strong mix of rural, commercial and retail bulk fuel volume and make it one of the largest independent fuel distributors in New Zealand.

CRT chief executive Brent Esler said the slowdown was a good opportunity to look at areas of improvement. “The most significant growth opportunity, and one that has been further materialising since balance date, has been the acquisition to the rights of the Challenge brand. Since commencement two months ago, we are receiving considerable interest from operators looking to join the Challenge network and this business is poised for significant growth during the next two years.”

Subsequent to balance date CRT continued its growth strategy with the acquisition of the South Canterbury based company of Annett Grain and Seed Ltd. This move will increase its scale and capability in the grain and seed production areas.

In a period of five years, CRT more than doubled turnover to exceed $800 million and while the growth reached a plateau last year, it is expected the current year will see turnover surpass the one billion dollar mark for the first time.

ENDS

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