Australian Agricultural Company in $15m profit, boost in Wagyu beef sales, little COVID-19 impact
Australian Agricultural Company has posted a $15.2 million profit in 2019-20, with a 20-per-cent rise in Wagyu beef sales.
AUSTRALIAN Agricultural Company has put the devastating cattle losses from last year’s floods and low prices behind it, posting a $15 million operating profit for the 12 months to March 31.
The northern cattle producer reported a $263 million turnaround in statutory earnings before interest, taxation, depreciation and amortisation of $80.1 million, compared with a loss of $182.7 million in 2019.
AACo said this year’s improvement was largely attributable to a $254.6 million turnaround in the value of livestock herds, with live cattle prices recovering from the sharp declines that occurred in the 2019 financial year.
The floods in February last year resulted in $45.6 million in cattle losses and other writedowns in the 2019 financial year.
AACo managing director Hugh Killen said the company had been hit by adverse seasonal conditions in the past year, resulting in a decision to cut herd numbers.
Most of those were in trading cattle, with the breeding herds remaining strong.
Despite the cut in cattle numbers, Mr Killen said it had been a “satisfying year”.
“We made meaningful progress in the execution of our branded beef strategy, with the sales momentum gained during the first half of the year continuing throughout the second half,” he said.
“The past year has not been without its challenges.
“We had to rebuild our Gulf infrastructure after the flood event in February 2019, while at the same time, continue to battle crippling drought across many of our properties.
“We achieved both while protecting our core breeding herd to ensure an uninterrupted supply chain.”
The company had concentrated on reducing its operating expenditure during the year.
While meat sales for the 2020 financial year, at $229.6 million, were 7 per cent lower than 2019 and cattle sales 11 per cent lower at $104.5 million, the gross operating margin was $190.7 million compared with a loss of $55 million the previous year.
Mr Killen said the COVID-19 outbreak had minimal impact so far on the company’s business.
He said the company took early action to swing its focus away from the food service sector into retail chains.
He said the retail sector had always been a strong component of AACo’s sales mix and represented 40-50 per cent of overall meat sales during the past year.
“We are now doing further work with our distributors and wholesalers to accelerate our supply of products into some of the world’s largest supermarkets, gourmet butchers and direct to customers online,” he said.
AACo said it was too early to tell what impact COVID-19 would have on its 2021 financial result.
Mr Killen said Wagyu meat sales volumes had risen 19.7 per cent in 2019-20, with prices 8 per cent higher compared with the previous year.
About 66 per cent of its Wagyu meat sales ends up in Asia, with AACo having a strong presence in South Korea with its Darling Downs brand.
North America was a key growth sector, increasing 34 per cent from the previous year.
Wagyu meat sales into Europe rose 17 per cent during the year.
AACo said China’s decision to suspend four abattoirs in Australia would have a minimal impact on its sales.
Mr Killen said China only accounted for 15 per cent of all meat sales.
Last year, China generated $34 million in revenue for the company.
By comparison, South Korea was double that, with revenue of $69 million.
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