Positive spins from the country’s biggest beef operator and the erstwhile Kathmandu, with both ending higher in Thursday’s trading session.
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Shares in Australian Agricultural Company (ASX: AAC) leapt just on 10% yesterday after the company revealed a 35% jump in operating profit to $67.4 million for the year to March 31 as it enjoyed better returns from its beef business.
The higher earnings came off a 14% improvement in revenue for the year to $313.4 million from $276.1 million.
The shares ended up 9.9% at $1.55 as the company talked expansively about ambitious plans to export more beef – especially the premium Wagyu type – to more offshore markets.
The company said the higher result “was driven by brand supported price increases in all major markets.
There was a mark-to-market cattle fair value reduction of $112 million over the year because of lower cattle prices seen over this period, some of which has come from weak prices in the US markets.
This cut the statutory net profit after tax just to $4.6 million and statutory EBITDA to $49.1 million.
AAC said on Thursday its statutory reporting requires the inclusion of the unrealised value of the herd at current market rates (that’s the same as the likes of Warren Buffett’s Berkshire Hathaway being forced to take in unrealised gains and losses on its share portfolio).
“However, the company’s supply chain and strategic direction focuses on selling branded beef into global markets, which is why operating profit and cash flow are more accurate measures of financial performance.”
Net assets jumped to $1.6 billion, largely due to a $294.2 million increase in the value of AAC’s properties, “underlining the strength of the company’s financial position.”
CEO David Harris said in the statement that, “This is an excellent operating result, illustrating progress against our strategy, particularly considering the challenging global conditions of the last 12 months.
“An exceptional wet season across AACo’s properties puts the company in a good position, with strong pasture growth expected to lead to increased kilograms produced as cattle move through the supply chain.
“This will help offset increasing input costs brought about by global inflationary pressures. Supply chain disruptions are also being felt in higher shipping costs, while geopolitical risks continue to create volatility in the global economy.”
The company said it was monitoring other global factors as well, including the US herd liquidation (because of dry weather and drought) which has put downward pressure on broader beef prices in some markets.
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Meanwhile KMD Brands (ASX: KMD) says sales have bounced nicely from the depressed levels a year ago caused by Covid lockdowns.
The NZ-based outdoor wear retailer told exchanges on both sides of the Tasman yesterday that it saw group sales up 15.6% from the same quarter in 2022.
CEO Michael Daly said rise that put group sales in the nine months up 27.7%.
He told an investor day function at Torquay near Melbourne, that the company’s performance for the rest of the year now hangs on the key winter trading period for Kathmandu and the northern hemisphere summer for Rip Curl and hiking brand Oboz.
“We are pleased to report that Rip Curl, Kathmandu, and Oboz have achieved another quarter of year- on-year sales growth.
“We now begin our key Kathmandu winter and Northern Hemisphere summer trading periods.
“The Group is well positioned to benefit from the return of international travel and tourism and is continuing to invest in the long-term international expansion of our brands.”
He said the company’s gross margin “remained resilient through the quarter”.
KMD shares ended the day up nearly 1% at $A1.045.
