Ruralco beefs up profits

Diversification helps rural services firm prosper

AGRIBUSINESS agent Rural co has become the latest farm sector player to credit drought necessitated diversification for a lift in profit, despite cattle and real estate prices flattening amid an ongoing dry spell.

The Sydney-based farm service and real estate firm yesterday said full-year profit rose 12 per cent to $25.18 million, a day after Elders said its underlying profit had risen 9.1 per cent.

Both companies say diversification has helped them weather the drought, although a positive outlook relies heavily on further late spring rain. Ruralco chief executive Travis Dillon (pictured) said while he was cautious of short-term seasonal conditions, he was optimistic due to recent rain, continued buoyancy in the sheep and wool markets, and stable cattle prices.

“We’ve had a good year, but what I am most impressed with is the management of our balance sheet – the things we can control,” he said.

Ruralco’s revenue in the 12 months to September 30 was up 5 per cent to $1.913 billion, helped by a 22 per cent lift in the water-trading division, and good figures in financial services.

Mr Dillon said water would continue to play an important revenue role with the continued expansion of high-value almond crops in South Australia, Victoria, and NSW, as well as berries.

“There will be a few things playing into the market going forward ... the amount of water available, what type of crops are in the ground,” he said.

“But we’re pleased with the Government’s support for infrastructure (under the Murray-Darling Basin Plan).”

The company’s real estate and rural services sector – which includes CRT farm wholesalers and Roberts Real Estate – was kept flat by the big dry. The live-cattle export division was hit by excess capacity and the impact of drought on export-ready cattle supply and feed costs, with underlying earnings down $3.1 million.

The company said the finish to the winter crop and extent of summer planting would be heavily dependent upon more late spring rainfall, with dry conditions likely to influence the rural supplies sales mix.

Increased offtake and livestock slaughter rates might also affect livestock volumes, particularly in early 2019, it said.

Ruralco has issued a final dividend of 6 cents, fully franked, unchanged from last year.

Ruralco also announced an investment in crop-monitoring platform DataFarming as part of a $2.7 million acquisition push that includes Digital Agriculture Services.