SALES to the dairy sector, with good growth and solid margins, were the real success story for the first half of Ridley Corporation Limited’s first-half financial year, according to the company’s presentation to investors this week.
The company had a strategy to support and retain customers in the main milk-producing areas, which continued to be affected by the high price of raw materials relative to the milk price paid to the farmer, and the availability of on-farm storage.
Ridley’s earnings before interest and taxes (EBIT) for 1 July to 31 December 2018 were $21.5 million, slightly below the corresponding 2017 and 2018 periods.
Sector volumes for 1H2019 total 1.019m tonnes, which includes poultry at 57pc, dairy at 11pc, pigs and rendering at 8pc each, aquafeed 2pc, packaged and beef/sheep feed at 4pc each, and aquafeed and supplements each at 2pc.
Drought feeding of sheep and cattle boosted the company’s sales of feed to those sectors by 18,000t over the previous year first half.
However, demand has begun to soften in the current reporting period.
The company said poultry volumes were on target, noting the expiry in October last year of Ridley’s supply agreement with Ingham’s at Murray Bridge in South Australia.
Ridley said new sales customers and feed volumes to poultry and pig industries had maintained a positive long-term outlook for many consecutive years.
It said the pig industry had recovered from its oversupply issues, but was suffering from the impact of high grain and feed prices which have caused widespread distress for farmers, the knock-on effect being a 14,000t contraction in Ridley’s pigfeed volume to 81,000t.
In a boost for its poultry and pig sectors, Ridley said major construction contracts were now in place for the new feedmill northeast of Bendigo at Wellsford in Central Victoria.
The mill, with an annual capacity of more than 350,000t, will be the company’s largest, and is underpinned with a 10-year supply agreement with Hazeldene’s Chickens.
The Wellsford mill has now received final development approvals.
Capital works for Ridley’s new aquafeed extrusion plant at Westbury in Tasmania are on track for commissioning in the upcoming quarter.
The plant has cost $19.8m on the property, plant and equipment balance sheet, and will have an annual production capacity of 50,000t.
The sale of Lots A and C at Lara north of Geelong reported in July last year generated aggregate proceeds of $9.5m which contributed to the 1H2019 result.
Its final lot for sale in Lara, Lot D, is now under an option agreement for a land-based aquaculture purchaser to acquire, subjective to a positive due-diligence outcome, by 30 June for $1.5m.