Ballance focuses on providing lower cost nutrients to kiwi farmers and growers
In a year of unprecedented challenges, which has seen global fertiliser prices fluctuate, the market is finally starting to return to pre-pandemic levels. Ballance, as a farmer and grower-owned co-operative, is committed to providing affordable nutrients for the coming season.
Today, the co-operative has announced profit after tax of $35m, which incorporates a write down of $51m on inventory, to move closer to global market prices ahead of spring. Revenue for the year is $1.22bn and total sales volume, including nutrient products, animal feeds and industrial ingredients, is 1.26 million tonnes.
“Ballance is guided by its founding reason for being as a co-operative, to provide a reliable supply of affordable and appropriate nutrients for New Zealand farmers and growers,” said Ballance CEO, Mark Wynne.
“The balancing of reliable and affordable supply was challenging in FY23. Global commodity prices reached record highs, driven by an energy crisis and the war in Ukraine,” he said.
“Access to nutrients got harder as countries looked to ensure food security, and while we were able to be agile in securing supply due to our long-term partnerships, the price we paid for nutrients in FY23 was higher than current market rates.”
Ballance shareholders, New Zealand farmers and growers, also faced significant challenges in the past 12 months, including increased operating costs, higher interest rates, and the impact of regulatory uncertainty. A reduction in milk price and drop in the meat schedule also contributed to less money in their pockets. These factors resulted in slower autumn sales than normal.
The global commodity market is now moving towards pre-covid, long-term averages, which is evidenced by a sharp drop in prices internationally, leaving Ballance with over-valued inventory.
“In our FY23 accounts, Ballance has written down $51m of inventory holdings, a decision that we believe is prudent and in the best interests of Ballance and its shareholder customers, as we head into an uncertain FY24” said Ballance Chairman, Duncan Coull.
“A short-term outcome of this strategy is that we will not be paying a shareholder rebate in 2023 given the impact of the impairment and the need to protect the balance sheet,” said Duncan.
“The board continues to ensure we are building resilience into the co-operative by retaining $35m in FY23. This supports investment in assets that underpin our operating results, innovation, and our future decarbonisation plans,” said Duncan.
In line with this investment, the Board has recommended a lift in the nominal share price from $8.10 to $9.00 per share, reflecting the increased retentions and the positive impact this has had on the equity within the co-operative.
“For New Zealand farmers and growers to compete on the world stage, access to affordable sustainable nutrients is a necessity. Despite these short-term impacts, Ballance remains focused on delivering an affordable and reliable supply of nutrients into the future, and to continue a strong innovation programme to ensure we support the transition to a low emissions, low carbon food and fibre producing nation,” said Duncan.
For further information:
Media - Aimee Driscoll - 027 487 9656