CRT turnover breaks the billion dollar mark

CRT turnover breaks the billion dollar mark

New Zealand farmer owned co-operative CRT achieved a total turnover of $1,092 million in the year ended 31 March 2011. Announcing the result, CRT Chairman Don McFarlane said the achievement was a fitting milestone on the 25th anniversary of the CRT brand which was adopted by the regionally owned trading society co-operatives in 1986, although these societies had traded since 1963.

“When a group of progressive South Island farmers formed this co-operative nearly 50 years ago to reduce their input costs, they struggled to find suppliers and measured sales in the thousands of dollars. They would be heartened to see their dream has now grown into a billion dollar company offering a full range of services to more than 25,000 shareholders,” Mr McFarlane said.

CRT achieved a turnover increase of 36 per cent from $801 million in the 2010 year. The co-operative has four main business revenue streams – being the farm supplies business, the CRT Card operation, fuel distribution and additional activities such as finance, livestock and real estate services. These latter services are commission based activities, meaning the bulk of the turnover is reasonably evenly spread across the other three trading operations.

The farm supplies and CRT Card business continued the strong growth experienced in recent years, and fuel distribution made an important contribution. CRT assumed responsibility for the Challenge service station brand and fuel supply during the year. Adding this business has made CRT one of the largest independent fuel distributors in New Zealand, and one of the major customers of Chevron in the Asia – Pacific region.

Mr McFarlane also announced the co-operative would distribute the majority of its operating surplus of $8.4 million to shareholders as a bonus rebate. This surplus was an increase of 66 per cent on last year’s $5.1 million and $6 million of it would be distributed in a 75 per cent/25 per cent split of share capital and cash to individual shareholders. This would bring the total benefits to shareholders in rebates and rewards for the year to $31.5 million. As in previous years, the bonus rebate would be based on shareholders purchases through the co-operative as follows:

Bulk Fuel 4.50%
Retail 1.20%
Seed 1.20%
Ballance Fertiliser 0.45%
CRT Card 0.45%

The CRT growth in revenue of 36 per cent was matched by a 33 per cent increase in total assets of the co-operative which now exceed $200 million.

CRT Chief Executive Brent Esler said that the growth had been assisted by a number of factors including the Challenge fuel business, the acquisition of South Canterbury based Annett Grain and Seed in May 2010, and most recently the acquisition of the Hokitika based farm supplies business of fellow co-operative, Westland Milk Products Ltd, in February 2011. The West Coast purchase was a particularly pleasing outcome and was a good example of cooperatives working together to benefit shareholders by focussing on their areas of strength.

Mr Esler said trading had continued strongly since balance date and as at 30 June the first quarter turnover was up 27 per cent on the same period last year.

Future Growth

During the year CRT secured the exclusive rights to the iconic Gulf Oil brand for New Zealand, which was followed by confirmation of Australia and Pacific Islands distribution after balance date. In New Zealand the Gulf brand will supplement the very successful CRT Fuel business, and provide product for distribution through CRT’s 31 store rural supplies network. The wider market opportunity for Gulf is very large and provides an opportunity to add significant value for CRT shareholders, as the CRT Fuel business has done. The development of this new oil business will be managed through subsidiary company ANZPAC Oils Ltd.

“After some years of rapid growth in our fuel business, we were becoming increasingly frustrated at not having a competitive lube offer for our many rural and commercial customers,” Mr Esler said.

“Similarly in our retail FarmCentre business we had premium oil brands that were coming under pressure from lower-priced oils. After evaluating a number of local offers, we elected instead to seek a brand that would give us a unique offer in the market. We believe developing this brand is a very logical extension of our fuel business and that it will deliver significant benefit to all shareholders,” he said.

Other Events

Other highlights for the year included the successful implementation of an ERP system replacing the various legacy IT systems operated through the various divisions of the company.

CRT and many shareholders were impacted by the September earthquake, with major disruption and damage to the co-operative’s new feed mill at Rolleston. The later earthquakes being centred in the city had minimal impact on the operations of the company although many staff were affected personally.

Further disruption in September also came through the Southland snow storms and CRT staff took a very active role in the rural recovery operations.

Business philosophy

Mr McFarlane said CRT had grown its fuel and vertically integrated feed business organically across New Zealand, but it was not sensible to pursue that strategy nationally in the fiercely competitive farm supplies market. CRT continued in its commitment to achieving, and actively sought, national scale, which was something it saw as essential to compete in a market that had recently seen the entrance of multinational players. CRT believed a farmer owned national co-operative grouping provided the scale essential to continue to deliver competition in the market.

The Annual General Meeting of CRT Co-operative will be held in Alexandra on Tuesday the 9th of August.

ENDS

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