Ruralco home on the range
Ruralco is expanding its footprint in the cattle industry after a jump in revenue and growth in live exports.
The company’s live export division Frontier has moved into cattle backgrounding and finishing programs in northern Australia. It is also involved in grain feedlot trials for supermarkets and export processors further south.
The production-based investments give Ruralco capacity to handle about 20,000 cattle and include leases over grazing properties.
Ruralco increased volumes in live exports in the six months to March 31, but this week joined Elders in warning the margins in the short-haul trade to Indonesia and Vietnam were under pressure with domestic cattle prices likely to remain high.
The sector analysis issued with Ruralco’s mid-year results, said cattle prices had been remarkably high in 2015-16 and predicted producers would hang on to breeding stock to rebuild herds.
“Turn-off over the past three years has been at an unsustainable level,” it said. “If these levels were maintained, it would result in Australia running out of cattle in seven years.”
Ruralco’s revenue was up 8 per cent to $803.7 million in the six months to March 31.
This compared favourably to Elders, which spurned Ruralco’s takeover advances in 2012 and remains a director competitor in towns across Australia.
Elders reported revenue of almost $730 million and net profit after tax of $24.6 million. Ruralco’s NPAT was up by 3 per cent to $10.8 million.
Ruralco chief executive Travis Dillon said market conditions had driven strong results in the agency and rural supplies divisions. Mr Dillon, who was promoted to the top job in November after joining Ruralco in 2007, said it was an exciting time for agriculture with many growth opportunities.
Ruralco has become a cornerstone investor in SproutX as it tries to capture some of growth expected in farming technology.
SproutX is a joint initiative between the National Farmers Federation and Findex to foster Australian innovation and commercialise the best new products. Ruralco believes the investment will give it a head start in taking to market new products based around data and digital technology.
“We want to be investing in sustainable growth opportunities for the business to ensure we leverage our broader product offering,” Mr Dillon said.
Ruralco announced a dividend of 8¢ a share.
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