Lift in FY19 result reflects underlying strength in NZ farming
New Zealand’s leading farm nutrient supplier, Ballance Agri-Nutrients, says the Co-operative’s strong FY2019 financial results are the product of an unwavering focus on supporting farmers, and the evolution of farming, as a strength for this country.
Ballance achieved a 4% improvement in Profit Before Rebate and Tax to $72.5 million, and has confirmed a farmer rebate of $45 per tonne for the financial year ended 31 May 2019 – today returning a total of $57 million to its more than 18,500 farmer-shareholders.
Chairman, David Peacocke, says a year-on-year lift in performance since FY2016 has been built on a collaborative approach, working with selected partners in New Zealand and suppliers around the world.
“Everything we do is geared to ensuring Kiwi farmers have access to the very best nutrients and advice to achieve outstanding agronomic results, stay competitive globally and drive sustainability in their businesses.
“This is a hallmark and what a co-operative is all about – supporting our farmers and helping them adapt and evolve so that they’re future-ready,” Mr Peacocke says.
Total sales for the year – including nutrient products, animal feeds and industrial ingredients – were flat on FY2018 at 1.64 million tonnes, with the manufacturing margin achieved against rising international urea prices being a key contributor to Ballance’s financial performance this year.
Mr Peacocke says increased retentions of $12 million are earmarked for accelerating the development of high-value digital platforms and services, ongoing investment in the Co-operative’s distribution network to deliver improved service capability, and expansion of topdressing services particularly to meet demand for precision aerial application enabled by SPREADSMART® technology.
Ballance’s re-investment capex of $87 million in FY2019 is more than double the typical spend for the Co-operative – reflecting a “sustained programme of investment to evolve both our bricks and mortar shopfront, and also our ecommerce capability and tools for our customers”, says Chief Executive, Mark Wynne.
While some of the spend was to replace or refurbish end-of-life infrastructure, it is “all absolutely future-focused and farmer-focused”, Mr Wynne says – with the development of a new Reporoa Service Centre a showcase example of integrated design to enhance workplace safety, environmental performance and quality practices, along with providing new levels of customer service from the ground up.
Customer feedback and increasing use of Ballance’s ground-breaking self-service silos that offer customers unprecedented convenience and flexibility has proven this model as a 24/7 solution for supplying products, with the launch of the latest on the West Coast this month bringing the total nationwide to six – with a further five planned for FY2020.
“This investment and our science-driven product innovation is helping us gain further momentum in a highly competitive market – through a laser focus on addressing customers’ needs, supported by a disciplined management of operational expenditure and costs of supply of both raw materials and finished products.”
Along with the underlying strength of New Zealand’s primary sector, Mr Wynne says the results in 2019 evidence the strategic value of Ballance’s Kapuni site – New Zealand’s only ammonia-urea plant with a lower carbon footprint than imported product, and where the Co-operative is now exploring a ‘green’ hydrogen and urea project.
“This renewable hydrogen hub will be a world-class example of the marriage of industrial scale renewable energy and hydrogen production. It also provides an example for other industrial operations and a future model for taking carbon out of New Zealand’s agricultural inputs by substituting green hydrogen for the natural gas (CH4) we currently use as a feedstock.”
Production of green urea alone would reduce the equivalent amount of CO2 as taking 2,600 cars off the road, and the ‘green’ hydrogen fuel could supply about 6,000 cars (or 300 buses and trucks) per year.
Mr Wynne says Ballance continues to pursue long-term strategic relationships such this hydrogen project with Hiringa Energy, and the Ballance Farm Environment Awards with the New Zealand Farm Environment Trust recognising leadership in environment and sustainability practices.
The financial year also highlighted the enduring value of the joint R&D programme under the Primary Growth Partnership (PGP) with Government, which ended in FY2019. Ballance has continued with the roll-out of specialist new environmental performance and productivity tools, including My Pasture Planner and MITAGATOR® – both developed with joint funding from the Co-operative and PGP – together with fertiliser product innovation that promises a new level of nutrient performance with genuine sustainability benefits.
Mr Wynne says the past year has also seen rapid adoption of the MyBallance online platform for customers, with the number of users at 31 May exceeding 7,500, up from 3,000 the at end of the 2018 financial year.
For further information:
Media – David Glendining 027 487 9656
Shareholders – 0800 267 266