Dairy industry problems worry Ridley

Animal feed supplier Ridley Corporation says problems in the dairy industry and other factors are hurting its business.

"Ridley advises that a number of external factors are currently having a detrimental effect on some sectors of the business compared to the first half financial results announced to the market on 20 February, 2013," Ridley said in a statement to the Australian Securities Exchange on Friday.

Ridley fell 19.5¢, or 17.3 per cent, to 93.5¢ after the announcement.

The external factors hurting Ridley include continued price pressure in the dairy industry and dairy farmers reducing the use of compound feed.

Oversupply and fierce competition in the packaged product sector and continuing restrictions on rendered product exports to some Asian countries arising from avian influenza outbreaks were also affecting Ridley's earnings.

Subdued trading conditions were likely to constrain the full-year earnings of Ridley AgriProducts (animal feed business) to a level similar to last year.

Ridley also said there had been no finalisation yet to talks with Penrice Soda Holdings over the likely end to a long-term contract to supply brine from Ridley's Dry Creek salt field in Adelaide.

Ridley has said that the Dry Creek site has significant potential for redevelopment.

The outcome of the Penrice talks would affect Ridley's future level of borrowing and gearing, particularly in light of the subdued trading conditions being experienced by Ridley AgriProducts.

Ridley said that once it had clarity on the contract termination and the future of Dry Creek, it would update the market on expectations of net profit and cash flow and its capital management intentions.