The Australian Agricultural Company (AACo) has significantly widened its first-half loss as dry conditions, falling cattle prices and a ban on live exports continue to weigh, however the group remained optimistic its strategic overhaul announced earlier in the year was progressing to plan.
In the six months to September 30 2013, Australia's largest beef producer posted a net loss after tax of $31.6 million, compared to a $18.7 million loss in the previous corresponding period.
Revenue was $177.7 million over the six-month period, a fall of 8.1% from the $193.3 million posted in the six months to September 30 2012.
AACo said the federal government's suspension of live cattle exports to Indonesia was a factor in the 12% decline in average live weight cattle prices, which had contributed to a $20.4 million slump in the group's cattle sales revenue.
The poor result from live cattle operations was partly offset by a strong performance from AACo's branded beef division, which improved its profit margins by concentrating on higher value customers and improved yields.
The group also said its strategic shift towards a less volatile, vertically integrated, customer-led model was progressing to plan.
In September the group launched a $299 million capital raising to strengthen its balance sheet and diversify its business, transforming itself from a pure pastoral company into an integrated producer, processor and marketer.
To that end, AACo is building a beef processing facility in Darwin, with the abattoir expected to be operational during the second half of 2014.
AACo chief executive officer Craig White said the shift in strategy as well as a $4.5 million improvement in operating cashflow for the half meant the group was in a strong position to take advantage of rising beef demand, especially in Asia.
“While external factors such as the drought and the corresponding low cattle prices have affected the result for this half, the company has been able to effectively manage the things it can control," he said.
The company did not pay a dividend for the period but said it was committed to reinstatement of dividends and would review its policy once the business returned to profit.
Shares in AACo were 3.5 cents lower at $1.09 at 1016 AEDT