August 2, 2012
Ravensdown becomes first fertiliser company to exceed billion dollar earnings
100% farmer-owned co-operative, Ravensdown, is the first New Zealand fertiliser company to surpass a billion dollars in revenue, the.
The co-operative also helped shield shareholders from world price volatility for imports such as urea for a large part of the reporting period.
Revenues for the year to May 31, 2012 were a record US$1.07 billion, an increase of 15%. The co-operative plans to distribute US$53.5 million to shareholders. This represents a total of US$40.48 per tonne of fertiliser purchased which is made up of a rebate of US$15.10 per tonne plus a bonus share issue of 17 shares per tonne (tax paid) valued at US$25.38 per tonne. Operating profit was US$51.8 million compared to a record US$71.6 million the year before. Total assets grew significantly to US$869.8 million, an increase of US$83.6 million.
"Ravensdown saw strong revenue growth in the past financial year and delivered a sizeable profit to return to its shareholders for the 35th consecutive year since farmers created their co-operative. Investment in our stores and manufacturing infrastructure is paying off, sales in Australia increased by 16% and all our NZ business units are making a profit," said Bill McLeod, Chairman at Ravensdown.
"We supplied 1.56 million tonnes of fertiliser to farmers in the year which is marginally up on last year. Fertiliser revenues were up due to the highly volatile world prices for products such as urea. The profits from urea were constrained as Ravensdown held the price at a constant US$798 per tonne for nine months of the financial year," added Bill.
"Given the size and significance of a farm''s investment in its soil fertility, it was no surprise to see our cutting-edge laboratory ARL process record test numbers. These test results underpin our advice and drive accurate nutrient management planning. When combined with Ravensdown''s precise spreading technologies and patented eco-n to help limit nitrate leaching, farmers have proven ways to raise production and reduce their environmental footprint," concluded Bill.
While revenues, tonnages ordered and customer numbers are growing in Australia, some quality issues related to fertiliser supply and poor farm returns meant that the Australian business made a loss of US$1.8 million. There are specific steps being taken to address that localised Australian quality issue.
"This is only our fourth year of Australian operations and to date these farmer-owned operations have been funded by Australian shareholders'' equity. Because our business is about scale efficiencies and we''re seeing more customer numbers and tonnages being ordered, the prospect for profitable growth is strong," said Bill.
"Our supply teams are importing nutrients and minerals from around the world and our new shipping joint venture is both profitable and providing greater control and flexibility. Our physical and chemical testing regimes have been tightened. We have been rationalising our suppliers and selecting those who can meet our detailed specifications. New global capacity for DAP is coming on-stream in Morocco and Saudi Arabia and for urea in Qatar and Algeria. We continue to negotiate with multiple suppliers to secure value for shareholders."
Through in-house development and acquisition of businesses such as C-DAX, Ravensdown is developing technology to target the need for "precision agriculture.'' "Information is at the heart of modern farming," said Bill. "The farm''s data can seamlessly flow from soil tests into the nutrient management plan, into the precision ground and air spreaders and then back through proof-of-placement maps into an online tool that graphically shows progress and areas for improvement. When feed wedges can be managed with actual measurement data from software and devices like those made by C-DAX, Kiwi farmers are going to have access to innovative information systems which will be the envy of the world."
For the past five years, Ravensdown has used its direct-to-farmer business model to increase its co-operatively-owned range of inputs in order for farmers to increase their outputs. For example, it is the third largest drench provider in New Zealand and is working hard to keep prices competitive in that industry. "Our animal health, agrichemical and nutrition business units stand on their own feet financially. Its early days for our strategic alliance with Cropmark to supply seeds, but shareholders have been able to easily combine their order for fertiliser and agchem with an order for some high-performing cultivars such as Ultra."
"Maintaining access to quality fertiliser is a key service for us. We opened up two new large stores in Balclutha in the South and Mata in the North. We also see continued interest in leasing silos for convenient on-farm access. We have also installed 22 new "fertigation" systems for those irrigated farms that can mix their fertiliser on farm to save transport costs."
Ravensdown is the largest Australasian fertiliser co-operative providing farmers with the tools, advice and inputs to raise their production and reduce environmental footprint.