Ruralco issues profit warning

The West Australian
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Agribusiness Ruralco Holdings expects its annual profit to fall sharply as a result of lower livestock prices and lower sales of agricultural chemicals due to drought.

Ruralco expects its profit for the year to September 30, 2013, will range from a breakeven result to a $1 million loss.

Ruralco made a profit of $13.8 million in its 2011/12 year.

"While the business has performed credibly in terms of activity volumes and cost management, performance was impacted by markedly lower livestock commodity prices and reduced first half agricultural chemical sales, a product of hot and dry seasonal conditions during the first half," Ruralco managing director John Maher said in a statement on Tuesday.

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"Pleasingly, rural supplies returned a solid second half performance and an increase in full year gross profit."

Mr Maher said sheep and lamb prices had recovered a little in the second half of the fiscal year.

But beef prices were still under pressure due to reduced rainfall and feed levels in northern and parts of eastern Australia, which had resulted in underweight stock and reduced marketing outlets in northern areas.

Ruralco's annual profit will include an approximate $9 million hit from non-recurring items, including a $7 million writedown of Ruralco's investment in agribusiness Elders, and costs associated with its proposed acquisition of Elders Rural Services.

The result will be announced to the market on November 19.

Shares in Ruralco dropped 33 cents yesterday, or 9.46 per cent, to $3.16.

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