MSA triumph
OPINION: Methane Science Accord, a farmer-led organisation advocating for zero tax on ruminant methane, will be quietly celebrating its first foray into fertiliser co-operative governance.
Chief executive Garry Diack says that while farmers recognise the benefits of the co-op they get through pricing, they also want a good capital return on their investments.
"At the end of the day, they want to see good capital return on their investments, and we are working to deliver a rebate next year," he told Rural News.
For year ending May 31, 2025, Ravensdown delivered an operating profit before impairments, tax and one-off adjustments of $13 million. After impairments and one-off adjustments, but before tax, the co-operative reported a net loss of $2 million.
The closure of manufacturing in Dunedin, the divestment of five lime assets, and the sale of C-Dax resulted in impairment of $9m - an outcome of the strategy to resize the business to meet the market.
"The co-operative's impairments over this financial year reflect that we are a business adapting to changing market conditions," says Diack.
"While the closure of manufacturing in Dunedin has had a significant impact on our financial result this year, ongoing we will realise the benefit of reduced operating and capital maintenance costs."
Read More:
- Kate Faulks urges more farmers to step into governance
- Plummeting sales forces C-Dax to cease trading
- Agnition announces new online sales channel
Ravensdown is hitting the "pause button" on further divestments but further asset sales aren't being ruled out.
"We're hitting the pause button on asset sales and sitting on what we've got, but it's a pause and not the end of asset sales," says Diack.
The co-op is also implementing a targeted programme of projects to enhance operational efficiency and support customers to 'do more with less' nutrients.
"Farmers are adapting to modern technology around variable nutrient placement. Our investments in our digital interface are keeping pace with the release of HawkEye Pro, and we continue to invest in technology and innovation through Agnition."
The co-op again worked hard to deliver competitive pricing throughout the year and focused on keeping prices lower while farmer customers emerge from the economic downturn.
"The co-operative has absorbed increasing international fertiliser prices and rising input costs to delay passing them on to customers, even as our own margins have come under pressure," says Diack.
Flat year-on-year revenue of $764 million, and volumes up 71,000 tonnes on the previous financial year to 962,000 tonnes, resulted in lower margins.
Despite the net loss, Ravensdown retains a stable funding base - building on improvements achieved in the previous two years. Inventories at year-end reduced further by $22 million to $128 million with debt reduced by 67% to $26 million.
Diack says trading wise it has done "okay".
"The impairments took us to a loss, but we've got the business in good shape. Of course, trading wise we wanted better results."
Ravensdown chair Bruce Wills says the co-operative's underlying performance continued to ensure a stable funding base that saw the balance sheet ensure a stable funding base that saw the balance sheet equity ratio lift to 80%, up 1% on the previous year.
Wills noted that the difficult trading environment didn't allow payment of a shareholder rebate.
"In this environment, it has been prudent to continue our conservative approach to capital expenditure and conserve funds.
"Although fair pricing was at the expense of a rebate, the business was able to leverage the strength of its balance sheet to ensure we're well positioned for any market upturn."
