CPC results defy tough environment

CPC results defy tough environment


Property
Tumultuous conditions caused by drought and flooding have appeared to not dampen Consolidated Pastoral Company's (CPC) earnings too much for the 2019 financial year. The company reported pre-tax and deductions earnings of $36.2 million and an underlying profit after tax of $22.9m, which did not include the non-recurring flood and drought impacts.

Tumultuous conditions caused by drought and flooding have appeared to not dampen Consolidated Pastoral Company's (CPC) earnings too much for the 2019 financial year. The company reported pre-tax and deductions earnings of $36.2 million and an underlying profit after tax of $22.9m, which did not include the non-recurring flood and drought impacts.

Aa

Adverse conditions and the sell down of properties have not dampened CPC's 2019 financials.

Aa

DESPITE enduring a tough drought, widespread flooding and divesting land, one of Australia's largest pastoral companies reported a growth in earnings for the 2019 financial year for 12 months, ending March 31, 2019.

Consolidated Pastoral Company (CPC) released its 2019 financial results last week announcing that its earnings before interest, tax, depreciation and amortisation (EBITDA) were $36.2 million before non-recurring flood and drought costs and the impact of herd valuation following the drought, which were $23.1m.

This was an increase of $1.9m from $34.3m in 2018.

"While the impact of the drought and floods have been felt across the industry, we are pleased with the underlying performance of CPC," said CPC chief executive Troy Setter.

"The CPC team has worked hard to grow our herd during this dry year."

After the non-recurring flood and drought-related impacts, CPC reported an EBITDA of $12.5m, which does not include property revaluations.

CPC's assets at year-end totalled $921.5m, compared to $925.5m in 2018.

This figure reflects higher land valuations, larger herd numbers and the sale of Nockatunga station, in south west Queensland, prior to the year end.

Revenue was $128.5m for 2019, down 8.8 per cent from $140.9m in 2018, which CPC attributed to lower average cattle values than last year and increased herd size.

Underlying profit after tax was up at $22.9m, compared to $15.8m in 2018.

This did not include the non-recurring flood and drought impacts.

The company recorded a loss after tax of $800,000, which were before one-off costs of $4m associated with corporate activity.

In terms of operational activity, CPC's cattle brandings were up 20pc year on year.

Beef production saw an increase of 29pc on the previous corresponding period (pcp), with 34.6 million kilograms produced.

Investments in property development continued, including $4.4m in capex towards water and fencing infrastructure to improve productivity and increase carrying capacity, contributing $14.4m to the property valuation increase.

Further investment in land development enabled CPC to improve productivity and increase carrying capacity.

The ongoing management of capital with the sale and leaseback of Manbulloo station, near Katherine, Northern Territory, was agreed upon last month.

CPC increased its shareholding to 90pc with Juang Jaya Abdi Alam (JJAA) in Indonesia, which owns and operates two feedlots, continued with strong profitability.

CPC's direct sales channels primarily involve selling cattle and beef to Asian consumer markets, domestic feedlots and processors, and exporting live cattle.

The company commenced a land conversion program to unlock further value with cattle land being converted to cropping land.

CPC's drawn debt has been reduced from $235.7m to $224.6m.

With the company claiming workplace health and safety to be a key priority, there was a 38pc decrease in days lost due to injury year-on-year.

"Total assets increased on a like-for-like basis, reflecting strong land valuations as well as the value being driven by our ongoing capital investment program," Mr Setter said.

"As a leading integrated beef and cattle supplier to international markets, we are well positioned to continue to benefit from the strong global demand for beef and further value creation through the development of our assets."

As at March 31, 2019, CPC owned and operated 15 cattle stations of more than 4.7 million hectares (mha), however with properties being sold since, these numbers have changed.

In March 2018, CPC announced its decision to divest its entire portfolio of 16 stations under ownership, spanning more than 5.5mha.

At the time, CPC's pastoral portfolio was estimated to be worth more than $1 billion.

In October 2018, Nockatunga was the first property to sell since the confirmed sell down.

It sold for a speculated price of $50m to Cleveland Agriculture, which is owned by Malcolm Harris.

The 2019 year began with CPC revealing in January that it had sold three stations to Clean Agriculture & International Tourism (CAIT).

Auvergne and Newry stations, Northern Territory and Argyle Downs, in the East Kimberley, were sold to CAIT for about $135m.

Sterling Buntine's Baldy Bay Pty bought Mimong, north west Queensland and Comely stations, central Queensland, for about $20m and $50m, respectively.

With Comely being the most recent sale disclosed to the public in April 2019, CPC said its portfolio comprised 10 cattle stations owned and operated by the company, with a carrying capacity of close to 326,000 head across 3.8mha.

CPC is owned by the United Kingdom private equity firm Terra Firma, which purchased CPC in 2009.

Aa

From the front page

Sponsored by