Ballance delivers cash to shareholders up front

Ballance delivers cash to shareholders up front

Results at a glance

Total distribution to shareholders of $76 million

Combined rebate and dividend of $60 per tonne

Total revenue of $893 million

Record group sales volumes of 1.75 million tonnes

Record Kapuni urea production of 270,000 tonnes

Equity ratio of 80.4%

Farm nutrient co-operative Ballance Agri-Nutrients has fast-tracked its 2014/15 rebate and dividend payment to get much-needed cash to farmers early.

On 31 July, the co-operative will begin its distribution of an average $60 per tonne, seven weeks ahead of its normal payment schedule. The rebate, averaging $55.83 a tonne along with a 10 cent dividend per share will see a total distribution to shareholders of $76 million – equating to 94 percent of its $81 million gross trading result.

Chairman David Peacocke said today that the co-operative’s solid performance meant it could support its shareholders and move quickly to do so.

“We’ve had a strong year and it came down to the simple question of who needs the money most? We are debt-free at year-end and can afford a one-off stay on retentions, so handing over almost the entire trading profit wasn’t a tough call to make.

“The low dairy payout has many dairy farmers facing the winter months with limited cashflow. Drought, then storms and floods have also hit beef and sheep farmers hard in many districts. We value our shareholders’ loyalty and they are doing it hard, largely through no fault of their own. Every bit helps so we will get those funds to them early to help ease cashflow pressure.”

Returns to shareholders vary according to tonnages and product purchased over the financial year, but a fully paid up shareholder buying 100 tonnes could expect $6,000.

CEO Mark Wynne said that while the rebate came in slightly under the record $65/t paid in the previous two years, it reflected the co-operative’s focus on reducing its margins through the financial year to support farm productivity.

“We could see commodity prices starting to turn ugly in the first half and made the call to adjust margins to keep our products very affordable. In effect, we shared some profit early. We will continue to keep a close eye on margins to balance pricing with profits for our shareholders during our new financial year.

“Farmers know it is false economy to cut back on fertiliser, especially with pasture being the cheapest form of feed. Our end result was record sales along with good performance from our innovative products like SustaiN.”

Total sales volumes across fertiliser, industrial urea, animal nutrition and industrials were 1.75 million tonnes compared to 1.72 million tonnes in the prior year. Revenues were $893 million compared to a record $921 million in the prior year.

Ballance’s $81 million gross trading result was $17 million down on last year’s $98 million, delivered in a peak year for the dairy payout.

Ballance recorded an $18.7 million impairment write down in the value of its Seales Winslow animal nutrition division, with no impact on the group’s shareholder distribution. The write down followed a decision early in the financial year to realign the business regionally to get closer to the main points of customer demand.

“We’re the market leaders in branded calf feed, and hold the first and second place in supplement blocks. It’s still a tight market but we are very well placed to manage this as well as any pick-up in demand.”

The co-operative’s ammonia urea plant at Kapuni delivered a record year for production achieving nearly 270,000 tonnes.

“The $21 million investment in upgrades in late 2013 paid off this year in product quality and plant reliability; however the drop in urea prices has lowered returns. The plant is more than 30 years old and we are taking a serious look at how we can continue to provide a reliable and sustainable supply which is globally competitive as part of a possible new build project.”

Mr Wynne said the co-operative was in its best financial shape ever with an equity ratio of 80.4% compared to last year’s 70.9% and no debt at year end.

“Ballance has come off a great year and as we look forward, our continued focus will be on creating value for our shareholders and delivering a return on their investment.”

ENDS

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