Farmland’s $2.8 million profit after tax for the year ending June follows a net loss of $9.3m in the previous year.
The return to profitability was put down to progress in year 2 of its five-year strategy and confidence lifting in the rural sector.
Turnover increased 4% to $2.55 billion from $2.46b the previous year, and revenue rose 14.5% to $847.3m from $740.3m. Gross profit of $185.4m was up 16.4%.
Operating ebitda of $33.5m was up 64%, while operating costs increased to $26.1m from $22m last year.
Last year’s net loss was downsized from an initial $14.3m to a $9.3m loss to reflect the revaluation of its “bargain” purchase of animal nutrition business Seales Winslow from Ballance Agri-Nutrients.
“It’s a great result and we are really pleased with it as it is a really good indicator of the hard work that is going into Farmlands paying off,” chief executive Tanya Houghton said.
Stronger commodity prices had helped put farmers in a better frame of mind, but that did not always translate to on-farm spending.
“While it certainly helped, it was not the driver of this improved performance this year. There are a couple of really key things that are delivering results for us that are directly aligned with strategy,” she said.
Farmlands had “doubled down” on animal nutrition sales and manufacturing, assisted by its investment in Seales Winslow showing a 20% increase in production in the first full year of ownership.
The new business had driven revenue and profit and over-delivered on its business plan, she said.
A key focus in the past few years was improving global sourcing, product purchasing and the supply network.
Wasted working capital had been released from inventory and the co-op would continue to follow a low-cost model, she said.
Reduced borrowings had given it headroom to invest in future joint ventures and opportunities in innovation and specialised solutions for farmers. Significant investment had just been signed off for improvements to mills manufacturing animal feed and nutrition, she said.
Total shareholder rebates were down from $92m last year to $81.8m and a distribution would not be paid to shareholders this year.
She said asking shareholders to provide more capital to the business was not seen as an option and the focus was on retained earnings to provide a strong balance sheet.
The value from Farmlands came in a more layered approach as opposed to an end-of-year profit share, she said.
“We are doing a lot of work on price every day and most of the shareholders are seeing that value returned to them in that price.”
Marketing and brand spending had increased, but the co-op had opted out of exhibiting at the Canterbury A&P Show to focus on mainly farmer events such as National Fieldays.
Meanwhile, Mid Canterbury-based farm supplies co-operative Ruralco recorded a $1.25m profit for its financial year following two difficult trading years.
tim.cronshaw@odt.co.nz
