ATS Newsbrief September 2013
We are at that time of the year where many agricultural service companies have (or are in the process of) disclosing their financial performance for the past 12 months. With spring virtually upon us, it’s a good time to reflect on the year that was from a financial reporting perspective. Rural suppliers were Neal Shaw, Group CEO hampered by unfavourable weather conditions in many regions, flagging livestock prices and a tough economic climate; expectations amongst the rural sector for the coming season remain high. Some of this will be due to the predicted increase in the pay out to dairy farmers. Generally, people perceive there is still a lot of money to be made in the rural supply business, but as the first financial results for 2012/13 were released, reality suggests that beneath the surface, the sector may well be struggling. For the first time in its 35-year history, fertiliser co-operative Ravensdown announced it would not be paying a rebate to its farmer shareholders after its pre-tax profits slumped to $6 million for the year ended May 31, a drop of almost 90 per cent on the previous year. A number of factors influenced this result and steps have been taken to divest of some Australian business ventures, currency and climate also impacted on this result. In line with earlier predictions, PGG Wrightson recorded a drop in operating earnings before interest, tax and depreciation, and amortisation to $45.8 million for the year ended June 30, down $55m on a year earlier. A write down of approx $321m in goodwill ($250m of that dating back to the 2005 merger) produced overall accounting loss of $306.5m, without which the after-tax profit would have been $14.6m, a drop of 40 per cent. The goodwill write down is a non cash measure to even up the balance sheet. While livestock revenue fell and its Australian seed business took a hit, retail, wool and irrigation earnings improved. At the time of writing this article Ballance Fertiliser has provided the one bright note so far, along with Fonterra’s promised 80 cent pay out increase. Ballance reported a record trading result of $92.6 million for the 2012–13 year ending May, up on last season’s $77.3m, despite farmers buying less fertiliser and falling sales during the drought. On face value it looks as though Ballance has had a fantastic year. From an ATS perspective sales have increased and a profit was made, but the true position won’t be known until the financial reports are released next month. The rural supplies sector is a high cost distribution model requiring significant investment in infrastructure while operating at low margins. I’m sure we will continue to see varied financial performances and restructuring as businesses look for ways to improve their financial performance.
Upcoming Events
17 September, 22 October & 19 November Farm Safety Manual and Training for Ruralco Cardholders For more information or to RSVP, call Unique Solutions on 03 423 2273 or online at www.ats.co.nz/farmsafety
28 October Labour Day ATS will be closed 26–28 October. If members have any emergency requirements the duty manager can be reached on 03 307 5100 or 027 487 6865.
Upcoming Industry Events
24 September FAR Farmer Day A chance to meet seed research experts from across New Zealand and the world at the FAR Farmer Day being run in conjunction with the International Herbage Seed Group Workshop at Methven (22–26 September). Registrations are limited and close on Tuesday 17 September. For more information visit www.ihsg.org
30 September Mid Canterbury Biz Start Sessions in the Biz Start groups will focus on building business and people management skills to equip you for senior level management positions, or owning or running your own farm business. For more information, contact Natalia Benquet on 021 2877 059 or natalia.benquet@dairynz.co.nz
22 October National Ewe Hogget Competition 2013 winner’s field-day For more information, please contact Ian Knowles on 027 4968 496 or email ian.knowles@beeflambnz.com.
1 & 2 November Ashburton A&P Show
13–15 November Canterbury A&P Show
50 CELEBRATING
YEARS