Rising sales of Wagyu beef raised on huge properties in the country’s north, combined with stronger prices, have helped Australia’s biggest ASX-listed cattle producer deliver a small operating profit despite the devastating drought.
In its first half results released before the market opened the Australian Agricultural Company reported a record $102.8 million of Wagyu meat sales, up 9.5 per cent, as Wagyu prices per kilogram rose 5.9 per cent.
AACo reported a $6 million operating profit for the first half, which is down 76 per cent on last year’s first half, largely due to the effects of drought.
The company reported a net statutory loss of $14 million, but this was much stronger than last year’s $68 million net statutory loss.
“We absorbed around $36 million in drought-related expenses in the first half, with increased costs of production, including feed and transport. That is about $11 million more than the same period last year, which shows how tough conditions are across the country,” said AACo chief executive Hugh Killen.
On an investor call to discuss the results Mr Killen said that while the company continued to face drought conditions “we make no excuses”, adding that AACo’s first half results showed the progress it was making.
AACo lifted its exports to all of its major customers during the half with healthy increases in exports to Asia, which makes up more than two-thirds of Wagyu sales, Europe and the Middle East (up about 26 per cent) and North America (up seven per cent).
“Our ambition to grow our premium brands and pursue our strategy as a branded food business has accelerated in the last six months, with encouraging results,” Mr Killen said.
“We’re seeing improvements across the business, culminating in our strongest half yearly Wagyu meat sales and strong growth across key regions,” he said.
Shortly before 10.15am on the Australian market AACo shares were up 2.5 per cent to $1.035, their highest level in more than a month.
AACo was established in 1824 and describes itself as Australia’s oldest continuously operating company.
Source: Thanks smh.com