Ruralco posts record half-year profit

25 May, 2017 04:00 AM
Ruralco Holdings managing director and chief executive officer Travis Dillon is pleased with the
Ruralco Holdings managing director and chief executive officer Travis Dillon is pleased with the "core business" performance that delivered record half-year profits on the back of good seasonal conditions across regional Australia.

GOOD seasonal conditions have boosted Ruralco Holdings Ltd profit to record level for the half year to March 31.

Ruralco, which owns Primaries of WA and the CRT group of independent rural retailers, reported net profit after tax for the first half of the year jumped 15 per cent to $12.4 million, up from $10.8m in the previous corresponding period.

Revenue of $841.4m was up 4pc on first half 2016.

Strong sales growth in rural merchandise, fertiliser and crop protection chemicals, high average livestock prices, recovery in the wool market and increased real estate sales volumes at higher average prices drove a strong performance by its rural services division, Ruralco said.

Gross half-year profit for the division was $132.7m from revenue of $697.1m compared to $118.4m from $694.3m for the same period last year, it told the Australian Securities Exchange last week.

But while higher than average rains across agricultural regions boosted rural services, it had the opposite effect on the company’s water services division.

Gross division profit slipped $2m in the half to $27.5m on revenue up from $96.7m to $102.3m.

Geographical concentration of its irrigation supplies and water trading businesses in above average rainfall areas in the west and south of the country contributed to the impact of the rains, Ruralco said.

But completed acquisitions of 14 new businesses during the half year – including Great Northern Rural Service, Geraldton – in key catchment areas and agricultural centres was expected to diversify the division’s earnings base for the future, it said.

A successful restructure last year of its live export division to reduce supply chain costs paid off with $674,000 gross profit growth despite a 12pc decline in volumes exported following closure of a southern business which primarily shipped dairy cows.

Gross profit of $4.8m was earned by the live export division from $92.4m revenue, down $14.5m on revenue for the same period last year.

A merger of Ruralco’s insurance business last year into Ausure Consolidated Brokers (ACB) joint venture had been completed, Ruralco said.

While the operating cost profile had been “right sized”, any benefits were yet to be seen on the balance sheet.

Gross profit for the division slipped $333,000 to $1.54m on revenue of $1.9m, down from $2.1m.

Customer acceptance of its seasonal finance product doubled during the half, Ruralco said.

Company focus in the second half of the year will be to optimise operational and financial performance of its newly integrated business acquisitions and the ACB joint venture, it said.

It would also continue to pursue strategic investments and partnerships, including commercialisation of an unmanned aviation vehicle (UAV) with PrecisionHawk and UAV flight services expert The Ripper Group.

Ruralco managing director and chief executive officer Travis Dillon said he was pleased with the strong performance of Ruralco’s core business.

“Our core traditional businesses have delivered top line growth driven by favourable seasonal conditions and focused cost management,” Mr Dillon said.

“The investment in high quality, accretive acquisitions has brought increased scale and diversity to our businesses, operationally and geographically.

“The future farming strategy is delivering balance to our network, priming the business to perform in the face of seasonal fluctuations,” he said.

Directors declared a fully-franked interim dividend of nine cents per share, up 12.5pc on last year’s interim dividend.

Mal Gill

Mal Gill

is wool and dairy writer for Farm Weekly


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Rusty...A shearing shed on a small place, might be used a week to five each year. 50 years down
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No varieties of barley left in WA suitable for Craft Beer production and little research. Craft
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We farm at Beacon we had no rain last time .Since the 1st of Jan.we have recorded 45 mm ,6mm