Agricultural products and water group Tandou Ltd (TAN) yesterday forecast a modest rise in profit for the year to June of between $200,000 and $1 million, thanks to some well-timed harvesting.
The company told the ASX in an update yesterday that it was now expecting earnings before interest and tax of between $8.7 million and $9.5 million, compared with the $8.5 million earned in 2011-12.
The shares rose 5% to 42.5c as a result, a much stronger rise than the small 0.3% rise in the overall market.
TAN YTD – Nice Harvest
Tandou CEO Guy Kingwill said in a statement the probable outcome was "another solid result for the Company that further demonstrates the merit of Tandou’s unique integrated cropping and water business model”.
“A successful cotton harvest at both Tandou Farm (near Menindee) and Pevensey (near Hay) was completed before the onset of recent wet weather. Yields are expected to average approximately 10.4 bales per hectare across the record area of 7,105 Ha (approx. 74,000 bales), based on preliminary gin turnout results.
“This combined with winter cereal production at Tandou Farm of almost 30,000 tonnes (harvested December 2012) contributed to the strong projected group result”.
“With working possession of the recently acquired Glenmea property (near Hay) combined with further development work, Tandou expects to increase group cotton area by approx. 20% in 2014.
“International cotton prices have increased by more than 20% over the past six months and combined with recent falls in the Australian dollar, cotton prices in Australian dollar terms are again trading above historical average levels”.
“Tandou Farm sources its irrigation water from the Menindee Lakes System and as these storages are currently at 75% capacity, this provides a secure water outlook for Tandou Farm into the 2015 cropping season. Recent regional rainfall has enhanced this position and has also contributed to a more favourable water allocation outlook”.
“Tandou continues to actively manage its water business and is well advanced in its program to trade approx. $28 million of water entitlements over the current financial year. Reinvestment of these funds back into Tandou’s actively managed water portfolio is currently underway and is expected to be completed by the end of the calendar year," Mr Kingwill said in yesterday’s statement.
Further information relating to the company’s financial and operating results will be included in the Preliminary Final Report for the year ending June 30, to be released during August.
