Anatural fit to sit at head of table

Ravensdown’s governance is being led by a Marton lawyer well- versed in farming, writes

He’s a farmer and a lawyer with a busy practice and will soon oversee the governance of a major fertiliser co- operative, running the rule over its entire operation. John Henderson’s working history ticks the boxes for a chairman in waiting. His legal practice in Marton specialises in farm conveyancing, overseas investment, estate planning, trust work and commercial law. Equally successful has been his family sheep, beef and deer farming operation, growing tenfold from 200 hectares to 2000ha.

Henderson seemed a natural choice when it was announced he would replace Bill McLeod at the head of the board table for Ravensdown at its February meeting.

With a $ 1 billion turnover Ravensdown, headquartered in Christchurch, must rank in the top 20 or 30 of New Zealand businesses in revenue, yet manages to duck under the media and public radar.

This observation has not escaped Henderson’s notice. He muses that city people are barely aware of its importance yet this is as ‘‘ clear as crystal’’ to the rural community.

‘‘ The wine industry gets headlines every day of the week and they get more headlines than otherwise. [ The fertiliser industry] is huge. The New Zealand economy would be severely compromised [ without it].’’

In similar fashion, Henderson would prefer to be a quiet achiever outside the limelight, but accepts as the figurehead of a large company that public appearances will be part of the job.

Seasoned after eight years as a director, he feels comfortable about leading a board reviewing a strategy to deliver better returns, services and value for shareholders.

This has its challenges, with the cooperative somehow having to assist farmers to increase productivity while answering concerns around the environmental impact of intensive farming, especially dairying.

In an unacceptable financial result by its own admission, Ravensdown failed to return a rebate to shareholders in the 2012- 13 year ending May for the first time in 35 years. Co- operatives aren’t in the business of driving out big profit margins, but they are expected to give their shareholders the best deal going and present them with a rebate at the end of the year.

Poor performing Australian investments and slower fertiliser sales during the drought counted against Ravensdown and high urea prices and a high dollar going against the cooperative’s policy of hedging long term contributed to a leaner profit.

The parallel between poor prices for lamb and sheepmeat over the past trading year and a less than pleasing financial result is not lost on Henderson.

As sheep and beef farming is Ravensdown’s major market, an impact on the business was inevitable.

The co- operative has reacted by setting up a strategy and shedding ‘‘ distractions’’ outside of its main business.

This week the sale of its loss- making Western Australian operations was confirmed for an undisclosed sum to Macrofertil Australia Pty, a 100 per centowned subsidiary of Louis Dreyfus Commodities. Its stake in its South Australian joint venture, Direct Farm Inputs, has been similarly offloaded.

Henderson says the board supports his view to deliver shareholders.

‘‘ I see our main task is to simplify our business and we have made some big steps in that direction . . . there are too many distractions that don’t provide revenue.’’

Ravensdown attributes the Australia division never gaining traction to several factors. A cluttered and competitive marketplace did not help and Henderson concedes the co- operative might not have fully understood the business across the Tasman as it should have. Seasonal buying habits differed from home and farmers tended to make large orders for their crops and buy little for the rest of the year. This made it difficult to spread sales evenly over the year and presented inventory problems, with droughts and flooding further fish hooks to fertiliser trading.

Ravensdown has enjoyed more success in Queensland where its business with sugar cane growers has record sales and is close to breaking even. This business is a co- operative, a model Ravensdown can relate to comfortably.

Henderson says Ravensdown has no fixed views one way or the other about the Queensland division, but will closely examine it along with the rest of the business as part of the strategy to improve results.

He says the co- operative had loyal staff and shareholders and will lift its game.

Personally, it grates him that no bate was paid for the first time.

‘‘ We really want to address that, but we have to become profitable to do that.’’

Henderson reasons Ravensdown may have been rebate- free last season, but this needed to be put into perspective as it still delivered a pre- tax $ 6m profit and others in the game had made losses before.

Equally, the result was down 88 per cent from $ 52m the previous year. Perhaps more galling is that its rival, Ballance Agri- Nutrients, posted a $ 92.6m profit, up from $ 77.3m, with a record rebate and dividend even though revenue was down at $ 878m.

All is not gloom though, with a strategy in place, sales going well and dairy farmers seem to be heading for a record milk price, while returns are improving within the sheep and beef farming sector.

This also needs to be put into perspective, says Henderson, as Ravensdown comes from a sheep and beef farming background rather than a dairying background.

He says opportunities exist to drive more business in dairying, but there are other priorities in becoming more profitable.

‘‘ I am not aggressive on opportunity. I am more aggressive on getting things right on the home front.’’

So far the house cleaning has included sorting out the currency cover after an average hedging performance as well as finalising the sales documents for the Australian businesses.

Henderson is keen to invest in facilities closer to home. Retail stores are expected to be upgraded, but

better returns to

re- Ravensdown is unlikely to fiddle with their locations. Better quality products and more timely delivery of fertiliser to farmers are on the cards, while the ‘‘ logistics situation’’ will be examined and an upgrade to the ‘‘ adequate’’ technology programme has begun.

Henderson says nothing will be exempt from a close examination.

‘‘ We will be looking at everything we do.’’

This includes currency hedging, which can add substantially to the bottom line when everything goes smoothly and in rougher waters can seriously erode a financial result.

Ravensdown has embarked on ‘‘ shortened’’ hedging. The theory is the strong dollar shows no sign of declining any time soon and the co- operative was being penalised with buying currency at

pretty

much a lower value which expected to catch up.

‘‘ We got it spectacularly right one year and on the balance did OK, but last year was not a good way to be. We are not currency traders, we are fertiliser people. It’s part of our business, but not the total business.

As for the close rivalry between Ravensdown and Ballance, he says farmers can only gain from this.

‘‘ I think it’s a fantastic thing. The New Zealand farmers don’t understand how well- served they are. When you go to Australia and see what companies are doing there, they are well- served here

took

longer

than and they need two strong co- operatives to achieve that. There is nothing like a bit of competition to keep everything clean and sweet.’’

Henderson also accepts that fertiliser companies have a responsibility to reduce fertiliser’s impact on the environment. This, he says, is part of its strategy.

‘‘ It would be irresponsible to do anything less. We exist for the benefit of the shareholders because we are a cooperative, but that benefit is wider than pure profit. I don’t have a problem with the environmental argument. We have to look at the environment and be responsible.’’

Henderson sees himself as a lawyer firstly by profession as this is his five or six- day- a- week occupation.

On top of this he oversees the farming business. This began as a family farm and has grown to 2000ha. His two sons have left university and are showing interest in the operation.

The quality of young people involved in the sector has impressed him and he believes a healthy sheep and beef farming sector is vital to bring in more new blood.

On the Ravensdown front, Henderson won’t go as far to say shareholders will see a quick turnaround in its business performance, but improvements are being made and a ‘‘ significant turnaround’’ will become apparent.

‘‘ They will take time to flow down and we shouldn’t expect a miracle, but we are on the right track.’’