Ravensdown reports solid result

Ravensdown reports solid result

30 July 2010

Ravensdown today reported a solid financial result for the year ended 31 May 2010.

Sales increased by 13% in New Zealand and 54% in Australia to a total of 1.299m tonnes.

The increase in sales reflects Ravensdown’s move to help farmers put on important nutrients by passing on substantial price reductions as world commodity prices fell during the year, says Ravensdown Chairman Bill McLeod.

“For example, our shareholders were paying up to $1111 a tonne for urea in 2008-09 and this has reduced to $620 a tonne. Similarly, superphosphate further decreased in December 2009 giving a reduction of $249 a tonne over the peak price.

“A strong result of $43m from operating activities is a marked increase on the $10m achieved in the 2008-2009 year,” he says.

Sales for the Australian business increased by 82,000 tonnes on the previous financial year, however the business faced a number of one-off issues which resulted in it making a $6m loss from operating activities. 

“This was a reversal of the previous year where the $15m Australian result from operating activities gave significant support to the overall business reinforcing the benefits of a trans-Tasman co-operative,” says Mr McLeod.

The loss in Western Australian was due to a combination of one-off factors including costs incurred with the grounding of a fertiliser shipment in Morocco earlier this year, and stock impairment on fertiliser and agrochemical products as a result of commodity prices continuing to fall.

Ravensdown’s Queensland business completed its first full year of operation in a profitable position with a healthy balance sheet and good cashflows. “The level of support we’ve received from farmers and growers means we can accelerate our five year establishment plan in the State,” he says.

Ravensdown’s overall financing costs reduced significantly compared to the challenging 2008-09 year reflecting a positive operating cashflow of $126m (-$21m in 2008-09) reducing the Co-operative’s working capital requirements.

The Co-operative’s before tax profit was $27m and it is returning $17m to shareholders through a rebate of $13 per tonne ($15.10/tonne in 2008-09).  “Ravensdown is pleased to again be delivering shareholders a good rebate, as we have done every year since Ravensdown was first created by farmers in 1977.”

This year’s lower rebate is attributable to Ravensdown taking a prudent position on the new building depreciation tax introduced in the Government’s May 2010 budget, which resulted in a significant charge of $4.5m.

Looking forward

“We remain concerned that fertiliser applications in New Zealand remain significantly below optimal levels.  The early signs are that many of our shareholders now see the ability to return their fertiliser applications to maintenance levels and this should result in a significant lift in business commencing this spring.

“Despite one-off issues in Western Australia this year, we continue to demonstrate the benefits of expanding into Australia. We have experienced economies of scale through sourcing, inventory management between Australia and New Zealand, and we are now exporting significant quantities of superphosphate to Australia,” says Mr McLeod.

Results for previous years

2009/10

08/09

07/08

06/07

05/06

04/05

03/04

02/03

01/02

Fertiliser sales tonnes (m)

1.299

1.081

1.453

(NZ and Aust)

1.354

1.335

1.613

1.570

1.604

1.491

Operating revenue ($m)

834

892

672

496

468

494

458

481

487

Operating

Cash flow ($m)

126

(21)

(109)

37.3

81

(34)

53

72

40

Net assets ($m)

316

296

278

268

269

259

243

213

182

Profit before tax & rebate ($m)

27

36.1

41.7

16.3

9.4

31.2

47.8

61.8

63.3

Rebate ($ per tonne)

13

15.10

15.10

12.60

6.70

15.10

15.10

13.70

12.20

Ends

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