Ballance 17% Improved Result A Boost For Farmers

MEDIA RELEASE
30 July 2002
FOR IMMEDIATE RELEASE

Ballance 17% Improved Result A Boost For Farmers

Ballance Agri-Nutrients Co-operative Ltd to-day reported a $50.4 million Group Operating Surplus for the year to 31 May, up 17% on last year.

Good farming conditions throughout the year, and production and distribution efficiencies were attributed as the major reasons behind the record result.

Chairman Mr Peter Jensen said distributions to shareholders averaging $23.40 per tonne cash for fully paid up shareholders, also an increase of 17% over last year, were made up of a rebate on purchases averaging $18.03 per tonne of fertiliser purchased over the year and a fully tax imputed dividend of 12 cents per share.

An average total payout to a Ballance shareholder is expected to be approximately $1,760.00 with a total of $23.4 million distributed to shareholders.

Mr Jensen said the excellent result had enabled Ballance to reinvest for future growth, fund major capital projects from cash flow, reduce debt and review goodwill and asset values in line with revised business expectations.

“These initiatives will significantly improve shareholder value in the Company going forward. What is especially pleasing is the growth in shareholder numbers over the year bringing the total to 17,700.Their equity capital has increased to $194.5 million, a 10% increase. Our Total Group equity ratio is now a very healthy 67.4%.”

Chief Executive Mr Larry Bilodeau said total fertiliser sold was up 7% at 1.48 million tonnes representing more than a 21% increase in tonnes sold over the past two years.
Revenue for the year was $464.8 million an increase of 17% over last year

He said Ballance product prices remained competitive throughout the year with price reductions during the season allowing farmers to achieve more than $5 million in savings.

“Farming and climatic conditions throughout the year have played a big role in our ongoing success. The results were achieved largely on the continuing improvement in farm profits across all sectors supported by the consolidation of the Company’s new branding and market presence, the ability to provide continuity of product supply and a motivated sales team that operates on a partnership basis with all our customers,” Mr Bilodeau said.

Ballance’s continued drive into new regions such as the Manawatu and the East Coast of the North Island, combined with good returns in the dairy and sheep and beef sectors contributed to the record sales year including a record April sales tonnage of more than 200,000 tonnes, Mr Bilodeau said.

Reinvestment in the Company continued to provide long term benefits with more than $30 million spent on capital works including redevelopment at its Awarua plant near Invercargill, new emission scrubbers at the Mount Maunganui plant, and alterations to the cooling tower and a range of other improvements at Kapuni.

Construction of new Service Centres at Rolleston in Canterbury and Manaia in Taranaki were also completed. In addition, work is currently underway on a major upgrade of dispatch facilities at its Whangarei plant.

Mr Bilodeau said the Company was committing a further $29 million of capital investment in the coming year. “The Group’s excellent financial shape allows us to approach this level of re-investment with confidence,” he said.

Chief executive, Mr Larry Bilodeau said the Company’s health and safety performance improved across all plants based on external audits, and compliance with environmental operating standards was enhanced during the year.

“We are actively working with New Zealand’s best rural merchant networks including Wrightson, RD1, PGG Farm Supplies, Farmlands, LandBase and Greenfields who play a vital role in the rural economy with their extensive local client bases built up over many years. Our decision to continue selling via these merchants was a measured one and has been well received by our customers.”

Mr Bilodeau said the highlight of the marketing strategy during the year was the high level of acceptance by the market of the new Ballance brand and recognition of “Ballance Blue”.

“The rebranding of a strong company carries some risk and we are delighted that profile and brand recognition has increased beyond all expectations. Our focus for the future is to continue to seek out ways to grow the Company’s own know-how for the benefit of shareholders.

“Our investment in science-based research and the development of new products will ensure we stay at the cutting edge of fertiliser and nutrient management knowledge with a number of new projects in the pipeline, which are due to come on line later this year. “

Mr Bilodeau said that while sales are likely to level off due to market conditions over the next financial year, Ballance expects to maintain a steady performance, “as most farmers know that fertiliser inputs directly correlate to bottom-line results”.

2001 2002 % change
Tonnes Sold 1.37 million 1.48 million + 7%
Total Revenue $395.8 million $464.8 million + 17%
Group Surplus $43.1 million $50.4 million + 17%
Distribution to Shareholders $19.7 million $24.3 million + 23%
Total Group Equity $219.1 million $238.0 million + 9%
Equity Ratio 66.2% 67.4% +1.2% points
Total Shareholders 17,300 17,700 + 2%

/Ends.

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