Ballance Kapuni plant hit by gas supply issues
Fertiliser co-operative Ballance has written down $88 million - the full value of its Kapuni urea plant in Taranaki - from its balance sheet in the face of a looming gas shortage.
Larger farming interests will receive over $100,000, the largest individual rebate payments; Ballance will return over $56 million to shareholders, representing 81% of its pre-tax profit.
The co-op today announced a 25% lift in its gross trading result to $71.3 million – reflecting current strength across much of the rural sector.
Ballance chairman, David Peacocke, says the positive financial performance in the year-ended 31 May 2018 allowed for a farmer rebate of $45/tonne – along with bolstering the balance sheet for future re-investment for the benefits of farmers.
The rebate will be paid out on July 27.
Total sales for the year – including nutrient products, animal feeds and industrial ingredients – were up nearly 1.5% to 1.64 million tonnes. The higher volume, together with a continuation of the growing demand for premium nutrient products that offer improved environmental performance, was reflected in a 2.6% increase in revenue to $826 million.
Peacocke says the cooperative enjoyed another very strong year – reflecting the positive sentiment among farmers and growers – “but we are very aware of the increasing competition in the New Zealand fertiliser market, and the need to increase our agility.”
He says Ballance is already gearing up for the future with investment in supply chain and manufacturing efficiencies “for the benefit of shareholders, customers and the local communities supplying the goods, labour and services for the projects throughout the country”.
Projects completed during FY2018 – such as a new Consignment Store in Waimate, and new expanded Ashburton Service Centre – were focused on improving service levels, load-out times and product availability through Ballance’s national distribution network. In another industry-first, Ballance has successfully piloted new self-service silos that offer greater convenience for customers.
“Our infrastructure investment is all linked to our focus on a smarter supply chain that will deliver higher service levels and greater choice and ease for our farmers.”
Chief executive, Mark Wynne, says another priority is accelerating digital services for customers to support the future competitiveness of New Zealand farming.
The MyBallance platform launched as a free offering to Ballance shareholders in the second half of the financial year already has more than a quarter of all active shareholders registered, so that they can see and manage their nutrient planning, ordering and records online.
“This is about being a forward-focused business – giving our farmers flexibility and using our digital capability to knit everything together seamlessly from specialist advice to sustainable and accurate placement of nutrients on-farm.”
