$47 million for shareholders


Ballance shareholders benefit from strong result

July 25, 2012

$47 million for shareholders

Another strong result by Ballance Agri-Nutrients has its 18,200 shareholders sharing in a $47 million rebate and dividend distribution.

Shareholders will receive $43.6 million through a $40 rebate per tonne of fertiliser purchased plus a further $3.4 million through an imputed dividend of $0.10 per share.

This will result in an average return of $44.29 per tonne, a result which compares well with last year’s record distribution averaging $50.29 per tonne.

The result has been delivered in a year where competitive year-round pricing helped by strategic global sourcing of fertiliser saw the co-operative deliver a $77.3 million trading result for the year to May 31, 2012, despite the fire at its Kapuni plant last August which severely hit domestic urea production.

Ballance Chairman David Graham says the total distribution is an excellent result for farmer shareholders, especially as they come into a new season facing tightening commodity prices and higher on-farm costs.

“Farmers are watching their budgets and a distribution close to last year’s record will be a very welcome deposit in the farm account. As a co-op, we take a lot of pride in getting nutrients to farmers at the best price and being able to share out the gains at the end of the year.”

Mr Graham said the year-end result was very positive for the Group, showing its underlying strength in a year of considerable disruption as a consequence of the Kapuni fire.

“Had we not had the fire and an extended maintenance turnaround later in the year, we estimate our result could have been $20 million higher.”

The Kapuni fire is the subject of an insurance claim, $33 million of which has been provided for in the accounts this year.

Mr Graham said the co-operative was financially strong with an equity ratio of 64.2% despite net debt increasing to $96.4 million compared to $38.4 million in the prior year. The majority of this increase relates to investment in capital assets and our investment in Seales Winslow.

Steady demand for nutrients throughout the year saw sales volumes increase by 3% to 1.44 million tonnes and a rise in Group revenue of 20% to $915 million. Chief Executive Larry Bilodeau said those higher volumes came from a year which was sure and steady rather than peaky, with continued growth in the South Island contributing to the increased sales.

“Unlike last year when we had a dramatic spike in demand through autumn, this year it was steady with demand consistent. This was certainly helped by our ability to keep prices stable through strategic and considered procurement in the global fertiliser market so we were securing quality product at good prices.

Mr Bilodeau said $62 million worth of capital had been invested in the business, including scheduled maintenance and improvements of Kapuni, as well as new and upgraded service centres and development of information technology applications specifically designed to improve interaction with customers.

“We go into a new financial year with a very sound balance sheet and good growth prospects and we are continuing to invest in research and development to support our customers to farm even more profitably and sustainably and future proof agriculture here in New Zealand.”

Mr Bilodeau said the co-operative’s Altum division continued to go from strength to strength, with New Zealand specific trials on its animal nutrition products showing demonstrable benefits for customers.

He said that further investments would support growth in animal nutrient subsidiary Seales Winslow, which along with Farmworks Systems was making good contributions to revenue.

“We’re delivering on our strategy to expand our complete nutrient management business and have a growing portfolio of resources, products and people to support growth in our economically crucial agricultural sector. We’re seeing the results on-farm and on our balance sheet.

“Our investments in animal nutrient products and in the farm technology sectors are important to this progress. We’re leading the way with a total package of products and services which are supporting our shareholders and customers to reach their on-farm goals and we are doing this at a very competitive price.”

25 July 2012

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