Allied Farmers doubles profits

The listed agribusiness reported a net profit of $2.5 million for year ending June 30, compared to $1.1m profit the previous year.

Allied Farmers’ balance sheet has improved, with a net cash position of $1.5 million – compared to a net debt of $1.7 million end of June 30, 2020.

Post balance date, the company says it will repay the $1 million bond, when its term expires this month – lowering debt and funding costs in the year now underway.

The company says the result reflected an improved performance from its livestock agency business, which recovered from the prior year’s impacts of Covid and drought.

However, this improvement was partially offset by a lower contribution from its veal business, which Allied says reflects Covid’s impact on in-market pricing and returns.

The result also includes an inaugural half year contribution from its recent investment in rural property manager New Zealand Rural Land Management Limited Partnership (NZRLM).

Allied Farmers chairman Richard Perry says the livestock business result reflects the continued hard work of staff and ongoing initiatives aimed at providing them with the right tools, support and environment to safely and efficiently deliver services to farmers.

“We continued to invest in our digital technologies, recognising that while sale yards play a critical role in the rural value chain, there is ongoing need for innovation to support the changing needs of farmers, and ongoing operational requirements and compliance costs.”

Allied Farmers hosted 303 auctions via its digital platform. All its sales yards now have live auction capabilities and the ability to livestream paddock auctions on farm throughout New Zealand.

Perry says the growth of its livestock lending business – with its loan book expanding by an additional $1.6 million to $5.2 million – was pleasing.

NZRLM delivered earnings of $1.15 million for the year.

Perry says Allied Farmers has been heavily focused on both growing its underlying business and diversifying through targeted investment.

He says the board has completed a review of its capital requirements and concluded that its strategic goals can be achieved through utilisation of its current balance sheet, and therefore has determined that it will not undertake the additional share placement.

“Having completed a strategy reset, Allied Farmers will continue to optimise and invest in its existing businesses and evaluate new opportunities and proposals when they present themselves.”

A decision on whether a dividend will be paid out will be announced at its annual shareholders meeting in November.