AACo meat sales price per kilo jumps 26pc to lift operating profit

The big beef production and marketing giant has also managed to produce 18pc more liveweight livestock while only lifting its actual production costs by one per cent.

However, the company is cautious about the global economic outlook for 2023, including soaring food inflation and tightening household spending, and the impact of inflation on its own farm input costs.

AACo, which has 26 stations and properties across Queensland and the Northern Territory, grew the value of its herd by $71m during the first half.

The increase was primarily due to increased calf branding numbers as its herd rebuild continues to gain pace in the wake of multiple years of drought and northern gulf region flooding events in 2019.

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"Our margins are higher, we're continuing our proactive sustainability agenda, we have advanced several key projects and we've been able to do more with less," said recently appointed managing director, David Harris.

"I'm proud of our people for their hard work in delivering these strong financial results, and their passion and dedication in producing the premium Wagyu that AACo is known for."

In the marketplace, its champion brands Westholme and Darling Downs now account for more than 88pc of AACo's branded beef sales.

These saw a notable expansion in North America, the Middle East and Australia, aided by the return of food service demand as COVID-19 pandemic lockdowns subsided.

Despite actually selling less meat, total sales revenue grew 19pc on the prior period to $122.3m as AACo shifted premium cuts from Asian and Australian supermarkets to service higher value markets.

Operating profit margins subsequently rose 23.4pc - a significant gain on the 2.5pc gain achieved 12 months ago.

However, softening cattle markets in Australia meant the company's official statutory net profit after tax actually fell more than a third from $83.2m a year ago to $51.6m as audits accounted for fair value adjustments in the financial results reporting period.

Similarly statutory earnings before interest, tax, depreciation and amortisation, at $92.3m, were also down 33pc from $137m in the prior year.

Mr Harris said AACo's focused effort on its five strategy pillars was continuing to produce positive results, "despite global economic uncertainty".

"We are adjusting to the conditions as required," he said, noting rising inflation and interest rates were impacting the cost of living for consumers.

The International Monetary Fund had tipped 2022 and 2023 would record the lowest global economic growth rates since the global financial crisis in 2009.

He said the current global operating environment had shifted significantly when compared with a year ago, including the rise in potential risk from livestock diseases landing in Australia, although the potential risks and challenges of foot and mouth disease and lumpy skin disease remained low.

"We are wary of the evolving global economic conditions but will stick to the fundamentals and the strategy that have served us well through other challenges over recent years," Mr Harris said.

"We're also monitoring the heavy drought conditions in the US and impact on herd size, which may result in global opportunities as it coincides with the ongoing rebuild of herds across Australia."

Although its share of AACo meat consumption volume was static, the North American market's branded beef sales increased 25pc in the first half of 2022-23 as the food service market rebounded and the company increased relationships with US chefs and digital broadcasters to push its upmarket Westholme brand.

However, Mr Harris observed, in the year ahead, the drought-related cull of US cattle numbers could mean increased competition from cheaper beef volumes in the retail market.

"When that sell-off settles down or the US herd rebuild starts, we see significant new opportunities for AACo in that market," he said.

The company had also engaged food influencers in Asia with success, achieving enhanced in-store brand awareness gains for the Darling Downs brand in South Korea, complemented by a refreshed online sales website.

Although higher value primal cuts were shifted away from supermarkets to the food service sector, and Asia's proportion of total AACo meat sales fell to 47pc, the region was still the biggest volume marketplace.

Overall it achieved "good average price uplifts" against this time last year.

Australia, which saw its proportion of total sales volume slip from 9pc to 7pc, too, was also a focus of optimising value, with certain cuts reallocated overseas to enhance returns in high value markets.

Yet, despite the lower local meat volumes, Westholme Wagyu beef generated a 35pc lift in sales revenue, helped by a new website for the brand and enhanced branding with help from influential chefs.

Volumes sold in Europe and the Middle East almost doubled as these two predominantly food service markets emerged from the pandemic and attracted considerable brand building and targeted product placement efforts by the company.

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