Monday, 7 August 2017

Continuing strong performance delivers greater returns for farmers


Ravensdown is paying a total annual rebate of $45 per tonne after a third year of strong results.

The 10% increase in rebate on purchased products compared to last year was due to continued balance sheet strength, growing market share and a profit before tax and rebate of $51 million from continuing operations.

“All-year value is important to farmers, so I’m delighted we were able to deliver this rebate as well as having led major price reductions throughout the year,” said Ravensdown Chairman John Henderson.

“This strong performance is now part of a consistent pattern Ravensdown has established. Strong years in 2015 and 2016 meant at the start of the last financial year, we were able to set ambitious targets to invest in infrastructure, to improve market share and to develop new technology,” said John Henderson. “I am so pleased that, for the third year in a row, our targets were achieved and we will still remain in the black after rebate and taxes.”

Sales volumes were up by 2% as the co-operative welcomed new customers yet revenue fell 5% to $627 million because price reductions were delivered as early in the year as possible.

For those who bought solid fertiliser before 31 May 2017, $20 dollars of the total rebate has been in shareholders’ bank accounts since 9 June. For fully paid-up shareholders, the remaining $25 per tonne will be paid in cash this month.

“Ravensdown is here to enable smarter farming which ultimately leads to a better New Zealand. Last year’s growth areas highlighted progress toward this purpose,” said Chief Executive Greg Campbell.

The co-operative’s environmental consultancy, which helps farmers to mitigate their impacts and work with regulatory frameworks, was its fastest-growing service. Farmer demand for N-Protect, which is the only Fertmark-certified urease inhibitor in New Zealand, showed farmers shared Ravensdown’s concerns of reducing nitrogen loss to the atmosphere. Our agronomic advice on using coated urea products such as N-Protect remains to only use them in the conditions where they confer a material advantage.

New technology called HawkEye was introduced to replace Smart Maps and help farmers assess and alter their nutrient levels across paddocks on an easily understood and readily shared map. Wholly-owned subsidiary C-Dax, which specialises in pasture measurement, spreading and spraying technology, delivered a healthy result.

The Civil Aviation Authority has given approval for the co-operative’s fleet of topdressing planes to be upgraded to the precision application service called IntelliSpread. As this service is phased in, it will enable greater control and accuracy of topdressing planes because the computer-controlled hopper doors adjust to deliver the fertiliser where it’s needed. Research released in February showed that on average 9% of hill country land assessed was non-productive or environmentally sensitive which means IntelliSpread could avoid those areas. Compared to blanket rate applications of fertiliser, this targeted rate application was estimated to deliver savings of on average $43 per hectare after a 10-year period.

Agronomy products such as seed and agrichemicals were backed up with technical advice and experienced a strong year. Animal health products delivered a good response against tough competition.

Greg believes Ravensdown’s contribution backs up New Zealand food’s back story. “When it comes to farmers and growers, we help them show others how they take their environmental responsibilities seriously, how they use technology to precisely diagnose what the land needs. Providing traceable application maps can assure global buyers that the details fit with the premium food story,” said Greg.

Speaking out for farmers who are in the process of improving their practices is important to Greg. “This co-operative was set up in August 1977 by far-sighted pioneers who believed in changing New Zealand for the better. Forty years later, I’m proud of today’s team because we’re still pushing to improve and our shareholders are supportive of that effort.”

The year at a glance
• $42 million invested in infrastructure including new loaders, conveyors, roofing, laboratories and high precision blending machinery: over $100 million in past three years

• $5 million invested in new technology and $4 million supporting research and development

• Operating cashflow: $60 million

• Equity ratios: 80% before rebate and 73% after rebate

• Profit before tax and rebate from continuing operations: $51 million

• Revenue: $627 million

• Rebate of $45 per tonne: $20 per tonne already paid in cash with rebate remainder of $25 per tonne also to be paid in cash by month end unless the customer is not a fully paid-up shareholder.