Refocused, revitalised, rebate paid

Ravensdown's cash, debt and profit positions have improved following a strategic review of its business; pictured, Ravensdown's Ravensbourne works, near Dunedin. Photo by Stephen Jaquiery
Ravensdown's cash, debt and profit positions have improved following a strategic review of its business; pictured, Ravensdown's Ravensbourne works, near Dunedin. Photo by Stephen Jaquiery
Ravensdown's refocus on its core business has paid dividends with a much improved balance sheet and the return of a rebate to farmers.

Last year, shareholders missed out on a rebate for the first year in the fertiliser company's history, after a loss-making operation in Australia caused a profit plunge.

The disappointing result prompted decisive action. A wide-ranging strategic review was aimed at freeing up capital, reducing risk, improving operating profit and lowering debt. The company also exited its operations in Western Australia and was now solely focused on New Zealand.

In the year ended May this year, Ravensdown recorded trading profit before rebate and tax of $46 million, up $40 million on last year. It had record operating cashflows of $185 million and the lowest debt levels for a decade.

Net debt fell $200 million to $49 million, equity ratio went from 49% to 65% and profit before tax and rebate from continuing operations increased from $28 million to $73 million.

The co-operative also announced a return to shareholders worth a total of $37.38 per tonne made up of $15 rebate and a fully-imputed bonus share issue worth $22.38.

In a statement, Ravensdown chairman John Henderson said the result placed Ravensdown in a strong position, with a strengthening balance sheet and profitability.

Cash, debt and profit positions had been ''significantly improved'' due to the actions taken since 2012-13 as part of the new strategy.

The company was also transitioning to a more flexible foreign exchange policy which it anticipated would make a positive contribution to its current year's performance, Mr Henderson said.

Chief executive Greg Campbell said increasing farm production and the subsequent need to replace soil nutrients resulted in rising fertiliser requirements and growing confidence.

New Zealand tonnages increased 7%, while services that helped farmers with their nutrient stewardship were also in ''high demand'', Mr Campbell said.

Rival co-operative Ballance Agri-Nutrients recently reported a record trading result of $93.5 million for the year ended May, up from $92.6 million in the previous year.

Revenue was a record $921 million, up from $878 million, while sales volumes were 1.55 million tonnes, an increase on 1.33 million.

A record $78.9 million distribution would be made to shareholders, which combined a rebate averaging $60.83 per tonne on fertiliser purchases, and a fully imputed dividend of 10c per share which added a further $4.17 per tonne to the distribution.

Chairman David Peacocke said the results underlined both rural sector confidence and the financial strength of the co-operative.

''Demand lifted during the year with forecasts for a high dairy payout, improving red meat returns, more maize crops and farmers moving to improve pastures after drought conditions. We capped off the year with very good autumn conditions which saw demand reach a peak, driving an upturn in year-end sales,'' Mr Peacocke said.

The result was achieved in a year where the business lost one month of urea production during the closure of its Kapuni plant for maintenance and capital improvements totalling $21 million.

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