Ravensdown cracks $1 bln FY sales as margins stay skinny 31 Jul 2012
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Ravensdown cracks $1 billion in annual sales, as volatile urea prices bite into margins
By Paul McBeth
July 31 (BusinessDesk) - Ravensdown Fertiliser Cooperative, which supplies close to half the country's agricultural fertiliser, racked up more than $1 billion in sales in its latest financial year, even as it absorbed volatile international urea prices that kept its margins thin.
Operating profit was $51.8 million in the 12 months ended May 31, down from a record $71.6 million a year earlier, the Christchurch-based cooperative said in a statement. That came as revenue climbed to $1.07 billion from $933.2 million a year earlier.
The cooperative has to balance bottom line profit to be distributed at the end of the year through rebates and share issues and what it charges for fertiliser, as its shareholders are also its customers.
Chief executive Rodney Green told BusinessDesk the reason behind the fall in operating profit came from Ravensdown holding its prices as it contended with international urea prices that fluctuated by as much as US$100 a tonne. For nine months of the financial year, the cooperative held prices at a constant $798 per tonne.
"Our margins got down close to zero around December, January February," Green said. "If we had sold at a margin, profit could have been $5/10 million higher, but we're comfortable with the number."
Green departs the cooperative at the end of the year, having spent 16 years in charge of the fertiliser firm. He will be replaced by Ngai Tahu Holdings boss Greg Campbell.
Ravensdown plans to distribute $53.5 million to shareholders, representing a total of $40.48 per tonne of fertiliser purchased. That's made up of a rebate of $15.10 per tonne, plus a bonus share issue of 17 shares per tonne valued at $25.38.
Last year the cooperative declared a $57 million distribution via a $15.10 per tonne cash rebate, and a bonus share issue of 18 shares a tonne, valued at $26.86.
Ravensdown increased its supply of fertiliser to 1.56 million tonnes from 1.49 million tonnes in the previous financial year.
All of Ravensdown's New Zealand units turned a profit in the financial year, though the Australian business made a loss of $1.8 million due to fertiliser supply and poor farm returns across the Tasman.
The fertiliser company expects to receive a $10.9 million insurance payout on its damaged Hornby manufacturing plant, and has already received $3.6 million to make urgent repairs.
Ravensdown increased its total assets by $83.6 million to $869.8 million as at May 31.
The full result will be published at Ravensdown's annual meeting on Sept. 25.
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