Ballance made an operating profit of $77.3m on $915m turnover in the year to May 31, while Ravensdown made $51.8m from $1.1 billion. For both turnover was up, but profit down compared to 2010/11 (see table).
Ballance supplied 1.44mt of fertiliser, a 3% increase , while Ravensdown, including its Australian operations, supplied 1.56mt, a 4.7% increase.
Ravensdown’s Australian sales were up 16% but took a loss of $1.8m. That follows losses of $1.6m in 2010/11 and $11.2m in 2009/10, but Ravensdown chairman Bill McLeod remains positive about the various trans-Tasman ventures.
“This is only our fourth year of Australian operations and to date these farmer-owned operations have been funded by Australian shareholders’ equity. Because our business is about scale efficiencies and we’re seeing more customer numbers and tonnages being ordered, the prospect for profitable growth is strong.”
McLeod told Rural News Ravensdown’s Australian shareholders collect a rebate and share bonus on a par with their New Zealand counterparts, except for some who qualify for a premium rebate having been among the vanguard to sign up to Ravensdown. However, such premium rebates are only paid when certain sales targets are met – which they weren’t last year in Western Australia, he notes.
During the year $40.5m was spent on logistics and infrastructure, mostly at Ravensdown’s production plants: Awatoto near Napier, Hornby in Christchurch and Ravensbourne in Dunedin. New stores were opened at Balclutha, Otago, and Mata, Northland. McLeod says physical and chemical testing regimes have been tightened following some quality issues, notably in Australia and on cropping farms in New Zealand.
“We have been rationalising our suppliers and selecting those who can meet our detailed specifications.... We continue to negotiate with multiple suppliers to secure value for shareholders.”
Ravensdown’s profit figure includes a pending insurance payout of $10.9m for earthquake damage at Hornby and $3.6m already received from insurers for urgent earthquake-related repairs.
Ballance’s results also include a substantial insurance provision: $33m following the fire at its Kapuni urea plant last August.
Chairman David Graham says without the fire and an extended maintenance turnaround later in the year profit could have been $20m higher.
Ballance spent $62m over the year, including scheduled maintenance and improvements at Kapuni, new and upgraded service centres, and information technology designed to improve interaction with customers.
Chief executive Larry Bilodeau says it’s “delivering on our strategy to expand our complete nutrient management business and have a growing portfolio of resources, products and people to support growth in our economically crucial agricultural sector.”
That said, he told Rural News there are no plans “whatsoever” to follow Ravensdown into animal health or agrichemical supply.
Ravensdown says it is now the third-largest drench provider in New Zealand and is working hard to keep prices competitive in that industry.
“Our animal health, agrichemical and nutrition business units stand on their own feet financially,” says McLeod.
Meanwhile it’s still “early days” for Ravensdown’s September-announced alliance with Canterbury forage, brassica and cereal breeder and wholesaler Cropmark.
