POTENTIAL buyers are welcome to talk to the Australian Agricultural Company about the future of its modern $100 million Livingstone abattoir, 50 kilometres south of Darwin in the Northern Territory but it’s not actually for sale.
The plant, officially opened just three years ago, has been hemorrhaging AACo’s money for the past year or more because of the high labour costs and a leap in Top End cattle prices.
After sinking to a $102.6 million full-year loss for the trading year to March 31, AACo has announced it will mothball the Livingstone Beef site by September, putting about 200 staff out of work.
Although AACo is pushing ahead with a strategy to focus much of its future efforts on top shelf beef markets and premium brands, chief executive officer, Hugh Killen said there were no plans to “run a sale process” for its Darwin district commodity beef processing plant.
The abattoir, which recorded a $22.4m loss in earnings before interest, tax, depreciation and amortisation (EBITDA) in 2017-18, primarily supplies cow beef for export, in particular to the United States beef market.
AACo’s overall net loss of $102.6m for the year to March 31 compares with last year’s $71.6m net profit.
However Mr Killen said there may be an alternative management approach to the way the meatworks operated in future.
“There could be options with other partners,” Mr Killen said.
He emphasised the company was keeping all options open, including when might be a suitable time for the plant to re-open.
“We are not saying it is for sale,” he said.
“If anyone has a credible offer we may, or may not want to talk.”
In the meantime, the company would focus on keeping the plant ready for the “right operating environment and an improvement in cattle market conditions”.
Management still believed Livingstone had a future place within AACo’s business model, but in the right environment.
Responding to suggestions AACo had already been approached by other processors with their own views on how best to run the meatworks differently, Mr Killen was evasive.
He said just about everybody had an alternative view about how AACo should operate.
Mr Killen also deflected suggestions the company was biding its time before it anticipated a decline in live cattle export shipments from northern Australia.
“We don’t have a view on live exports stopping,” he said.
“We are not making our decision based on the live export trade.”
The Livingstone Beef plant was planned about eight years ago to help provide a fresh market option to relieve the depressed northern Australian cattle market of excess older cattle unsuitable for the live trade.
It was also to provide an alternative to trucking stock thousands of kilometres to meatworks in Queensland or South Australia.
AACo expected its own herds would provide significant supplies to the site.
However, the recent big revival in domestic cattle prices, combined with an earlier heavy cull in older breeder numbers during a run of dry seasons has created “a particularly challenging operating environment”.
Mr Killen said the plant relied on non-AACo herds to provide about 80 per cent of its throughput.
Supply chain inputs were far higher than would be expected in southern beef processing environments – including labour contracts at the abattoir.
