Short­age of sheep helps boost prof­its

Townsville Bulletin - - NEWS - TREVOR CHAP­PELL

AGRI­CUL­TURAL ser­vices group Ru­ralco has made a record full- year profit, partly be­cause Aus­tralia does not have enough sheep.

Ru­ralco says its ru­ral sup­plies busi­ness ben­e­fited over the past year from good rain­fall in Vic­to­ria, Tas­ma­nia, South Aus­tralia and south­ern New South Wales as farm­ers bought more crop in­puts such as fer­tiliser and weed killer.

High prices for cat­tle, sheep and wool also boosted earn­ings.

Post­ing Ru­ralco’s re­sults for the year to Septem­ber, chief ex­ec­u­tive Travis Dil­lon said sheep, lamb and wool prices re­mained high be­cause de­mand from over­seas out­stripped sup­ply.

The size of sheep flocks in Aus­tralia and New Zealand drove prices, Mr Dil­lon said.

Sheep and lamb are ex­ported all over the world but most of the wool goes to China.

Mr Dil­lon said global wool stocks were not suf­fi­cient to meet de­mand.

“That’s driv­ing the de­mand for Aus­tralian prod­ucts,” he said.

“There’s not enough sheep – the Aus­tralian flock of sheep is tens of mil­lions of head down on what it was in its peak.

“It goes back to the dereg­u­la­tion of the wool price.

“The sheep flock in Aus­tralia has been de­plet­ing for decades.”

Mr Dil­lon said record wool prices were lead­ing ex­ist­ing wool pro­duc­ers to ex­pand pro­duc­tion.

Ru­ralco’s net profit of $ 22.4 mil­lion for the year to Septem­ber rose from $ 4.3 mil­lion in the pre­vi­ous year, when the bot­tom line was weighed down by the re­struc­tur­ing of its live ex­port and wa­ter busi­nesses.

Both re­struc­tured units posted earn­ings growth the past year.

Ru­ralco’s un­der­ly­ing profit, which ex­cludes one- off items, rose 95 per cent to $ 26.2 mil­lion, while rev­enue was up 2 per cent at $ 1.83 bil­lion.

Its bot­tom line was also boosted by an in­crease in real es­tate vol­umes and ac­qui­si­tions that added to the size and ge­o­graph­i­cal reach of Ru­ralco’s busi­ness.

Mr Dil­lon said he was pleased Ru­ralco’s core tra­di­tional busi­nesses had de­liv­ered strong or­ganic growth, and that there had been a pos­i­tive turn­around in live ex­port and wa­ter re­tail sales.

Ru­ralco said good rain in the east­ern states in Septem­ber and early last month should sup­port sales of ru­ral sup­plies over the next few months.

Cat­tle prices are ex­pected to ease, re­turn­ing to his­tor­i­cally av­er­age prices, though in the short- term, prices are ex­pected to be largely in­flu­enced by sea­sonal con­di­tions.

The medium- term out­look for wool, sheep and lambs was pos­i­tive, the group said.

Mr Dil­lon said Ru­ralco would fo­cus over the next year on de­liv­er­ing the tar­geted earn­ings con­tri­bu­tions from the port­fo­lio of ac­qui­si­tions com­pleted this year.

The com­pany is pay­ing a fi­nal div­i­dend of 6c, fully franked, up from 2c a year ago.

A BIT SHEEP­ISH: There is a big de­mand for Aus­tralian wool prod­ucts, most of which goes to China.

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