Farmer rebate goes as Ravensdown earnings slump
Ravensdown Fertiliser Cooperative, which supplies almost half New Zealand's agricultural fertiliser, will miss paying a rebate to its farmer shareholders for the first time in 35 years after drought and losses from its Australian investments hit earnings.
Pretax profit slumped to $6 million in the 12 months to May 31, from $52 million the year earlier, the Christchurch-based cooperative said in a statement. Sales slipped to $1.04 billion from a record $1.07 billion the year earlier.
Sales of the cooperative's agricultural fertiliser fell 4.4 percent to 1.49 million tonnes as farmers pulled back spending, faced with New Zealand's worst drought in 70 years. Ravensdown is planning to exit its Australian joint venture Direct Farm Inputs which sells fertiliser in South Australia and Victoria, as well as its fertiliser operations in Western Australia, where a pre-tax loss of $23 million weighed on earnings.
"This unacceptable result has already prompted decisive action," chairman Bill McLeod said in a statement. "We have initiated a wide-ranging strategic review with the aim of freeing up capital, reducing risk, improving operating profit and lowering our debt position."
Ravensdown said in February it was in talks with its joint venture partners to sell its half stake in Adelaide-based Direct Farm Inputs after the business moved to selling through intermediaries, rather than direct to farmers, limiting the prospects for developing a cooperative model.
Last month, Ravensdown said it was also in talks to sell its fertiliser operations in Western Australia after four years of losses since entering the market in 2008 as sales volumes and margins are crimped by drought, the global financial crisis and volatile grain prices.
The cooperative estimates its assets yet to be sold are worth $134 million, the majority of which are stock and debtors.