Drought leads to profit hit for Thomas Foods International
The rising cost of livestock due to the drought has led to a hit on Thomas Foods International’s before tax profits.
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The drought has hit farmers hard across the country and it has also led to a drop in earnings for agribusiness Thomas Foods International.
The company’s financial statements show its before tax profit halved in the past financial year, dropping from $69.2 million to $34.5 million.
Turnover also dropped, from $1.57 billion in 2017-18 to $1.48 billion this financial year.
But, the full and final insurance settlement of $191 million, following the fire that destroyed the company’s Murray Bridge plant in January last year, was brought forward this financial year, meaning the company’s after tax result was much rosier, rising from $28.6 million to $160.3 million.
The profit paid out to its shareholders was well down on last year, dropping from $67.3 million to $19.9 million.
The financial report says that 2019 has been a year of consolidation for the business, following last year’s devastating fire.
The company said in the report that this challenge played out against the backdrop of extended and severe drought conditions impacting the Australian meat industry.
Reduced processing capacity post the Murray Bridge fire also meant volumes were down on the prior year.
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“The impact of the drought and its effect on livestock costs placed pressure on margins and overall profitability across both the processing and distribution businesses,” the company said.
“As a result gross profit was lower both in dollar and percentage terms, due to lower volumes and gross margins versus the prior year.”
In June, Thomas Foods committed to a rebuild of its Murray Bridge plant, with an estimated 2000 jobs expected to be created.
The new facility will be located 10km from the town centre and 8km from the old abattoir.