Agribusiness Ruralco has returned to profit as its live export operations get set for more shipments.
Tasmanian-based agribusiness Ruralco’s new live export business has made a loss due to start-up costs, but has orders in the pipeline.
Ruralco says its Frontier International Agri business reported a first-half loss before tax of $2.1 million due to higher-than-expected establishment costs.
But Frontier International was procuring cattle for a number of shipments for short- and long-haul destinations, during the second half of Ruralco’s fiscal year.
“While costs are higher than the business case, the sales pipeline is on track with the first significant shipment of 3,200 cattle sailing from Darwin earlier this month and a number of orders for the second half,” Ruralco managing director John Maher said in a statement on Tuesday.
Despite the loss by Frontier, which RuralCo took control of last October, the agribusiness group returned to the black with a $5.1 million net profit for the six months to March 31.
Ruralco had suffered a $500,000 loss in the previous corresponding period, but flagged in April an expected return to profit.
It cut its fully franked interim dividend to eight cents per share, down from 10 cents.
Mr Maher said that despite dry, hot seasonal conditions in the first four months of the year, Ruralco’s businesses were continuing to show positive trends in terms of volumes and profitability.
Ruralco’s diversification into new areas such as live export and extension of existing operations were providing some protection against volatile seasonal conditions and commodity prices.
In February, Ruralco acquired Total Eden, a retailer of sustainable water solutions.
Ruralco said that building scale in the water business was important in helping to mitigate the seasonal risks associated with its traditional operations.
In the first half, Ruralco’s rural supplies business lifted its gross profit by 19 per cent partly due to improved late autumn rains in southern cropping regions and increased market share from new rural supplies stores.
Gross profit from the cattle and sheep business in Australia lifted by 31 per cent as higher numbers of animals were sold due to drought in Queensland and NSW and a general increase in demand for quality stock.
Ruralco Water increased the volume of water traded by 50 per cent, on the back of increased irrigation for summer rice, cotton and horticultural crops, and for the dairy sector.
Real estate operations lifted gross profit by 13 per cent as the overall rural property market improved.
But gross profit from wool operations fell 14 per cent due to lower wool production and weaker wool prices.
Shares in Ruralco rose three cents to $3.68.