The 2015 beef boom is having some spillover effects in the stockmarket. Elders (ELD) mentioned it in its full year earnings report earlier this month.
Now Australian Agricultural Company (AAC) says it too has shared in the jump in demand and prices from local and US buyers of our packaged beef.
AACo said yesterday its shift away from live cattle exports and toward packaged beef shipments had helped it to produce its first interim profit in eight years.
AACo told the ASX yesterday that it had made a net profit of $50 million for the six months to September 30, compared to a $13.59 million loss for the same period in 2014-15.
Total revenue jumped 71% on the same period last year to $258 million as revenue from meat sales nearly doubled to $218 million.
Packaged meat represented 84% of AACo’s revenue, up from 76% on the 2015 first half, and 47% over all in 2014-15, thanks to the company now processing its own cattle through its Livingstone Beef abattoir near Darwin.
“We are selling more kilograms, off the same herd base, for more money,” managing director and chief executive Jason Strong said yesterday. “Sales of boxed beef increased by $103 million half-on-half and now account for almost 85 per cent of total revenue.”
"These sales are predominantly to the same customers, who are buying more beef.
“While we continue to build our branded beef business, we are also continuing to invest in the fundamentals that are so important to a robust supply chain,” Mr Strong said.
AAC 1Y – Boxed beef boosts AACo
AACo last declared a first half net profit when it made $5.9 million in the six months to June 2007 – before the GFC.
The company said higher prices helped, with short-fed cattle prices up 10% on a year earlier, Wagyu prices up 6% and external live cattle prices soared 31%.
Sales had increased to all overseas markets, Mr Strong said, with Livingstone largely providing the strong US market.
"Our traceable supply, sustainable practices and our unique heritage means that our boxed beef products can occupy a unique position in global food markets," chief financial officer Andrew Slatter said in his results presentation.
"Our involvement throughout the supply chain gives our brands an authenticity, which is difficult for other participants to replicate,” Mr Slater said.
Despite the return to the black, shareholders will have to wait for a payout with the company withholding a decision on the resumption of paying dividends.
"The company is committed to the reinstatement of dividends and has previously indicated that on a return to sustainable and significant positive operational cash flows, directors will review dividend policy and payments,” directors explained in yesterday’s statement.
The shares rose 2.3% to $1.505.
