Profits drying up

Ruralco warned that low rainfall could reduce its profit in the first four months of the financial year by up to 70% from $11 million previously, according to managing director John Maher.

The comment came from Ruralco's managing director, John Maher, who said low rainfall was hurting demand and profits.

According to the company, a lack of rain in key agricultural regions has reduced demand for agricultural chemicals and lowered demand for restocking livestock, which in turn has affected livestock prices and sales.

The article highlights reduced sales of chemicals and weaker restocking livestock demand as the main areas being hit by the dry conditions.

Ruralco's warning applies to the first four months of its financial year.

Ruralco said profit could fall by up to 70% from $11 million previously — an up-to-70% reduction would imply profit could be around $3.3 million for that period (an approximate figure based on the numbers given).

The company noted that weaker demand for restocking livestock reduces buying pressure in livestock markets, which contributes to lower livestock prices.

Investors should note Ruralco's public warning that low rainfall has materially reduced demand for chemicals and restocking livestock, with a possible large profit hit in the first four months — watching the company's updates and seasonal rainfall trends will be important for tracking its near-term performance.