This article is from the Australian Property Journal archive
DESPITE favourable seasons across its properties and higher sales, challenging market conditions has seen The Australian Agricultural Company (ASX:AAC) report a weaker FY24 operating profit.
AACo announced a $50.5 million operating profit, which is down 16.9% from the previous corresponding period’s $67.4 million.
Sales revenue of $336.1 million was up 7% vs pcp, supported by 24% higher meat sales volume, but cost of goods sold valued at cost has risen by $34.8 million to $227.4 million.
Operating cashflow of $9.3 million was also down vs pcp, as the company continued to align spending with its strategic priorities, in addition to supporting the production of more liveweight kilos. The herd grew further in FY24, up 5% to approximately 455,000 head of cattle, with growth in the Wagyu herd positioning the company for future market growth. Higher cost of debt impacted operating cashflow performance as well.
Cattle prices hit a four-year low in FY24, leading to a downward unrealised mark-to-market fair value adjustment in the herd of $149.4 million. This resulted in a Statutory Net Loss After Tax of $94.6 million and a negative statutory EBITDA of $87.9m, both down on pcp.
Net assets of $1.52 billion were down 3% vs pcp, as the reduced herd value offset a $78.1 million increase in pastoral property and improvements. NTA was down 3% as a result, to $2.51 per share.
Managing director and CEO David Harris said market conditions were challenging but the company’s ability to increase sales volumes whilst experiencing price resilience shows the strength of its supply chain and the value associated with its branded beef.
“Overall meat sales revenue increased 10%, and AACo was able to largely maintain or increase prices on branded beef in most of its target regions in FY24, a strong outcome in the current market environment.
“An oversupply of beef in some markets continued to put pressure on prices, however, the company was able to maximise value from its global distribution network, whilst building on the ability to deliver the full potential from AACo’s brands in the future,”
Harris also highlighted benefits of the Goonoo property expansion in Central Queensland began to be realised, with a 12% increase in intensive supply chain capacity.
“The boost in supply to our global markets will help underpin the growth of our brands, enabling us to meet growing demand now and into the future,”
Meanwhile AACo has committed to a 10-year investment as a Tier-1 partner in the Zero-Net Emissions Ag Cooperative Research Centre (CRC) in the second half of FY24, to address the challenges around reducing emissions in agriculture.
Looking ahead Harris said consecutive favourable seasons across AACo properties are contributing to strong pasture growth and improved productivity.
“FY25 will be the first full year realising the benefits of our investment in the intensive supply chain, with increased supply of branded beef through the Goonoo property expansion. AACo will maintain its focus on driving productivity and quality across the supply chain, in an environment of moderating inflation.” Harris concluded.
