Ravensdown first fertiliser company to break billion dollars

31st July 2012

Ravensdown first fertiliser company to break billion dollar milestone

Ravensdown, the 100% farmer-owned co-operative, has become the first NZ fertiliser company to surpass a billion dollars in revenue. The co-operative also helped shield shareholders from world price volatility for imports such as urea for a large part of the reporting period.

Revenues for the year to 31st May 2012 were a record $1.07 billion, an increase of 15%. The co-operative plans to distribute $53.5 million to shareholders. This represents a total of $40.48 per tonne of fertiliser purchased which is made up of a rebate of $15.10 per tonne plus a bonus share issue of 17 shares per tonne (tax paid) valued at $25.38 per tonne.

Operating profit was $51.8 million compared to a record $71.6 million the year before. Total assets grew significantly to $869.8 million, an increase of $83.6 million.

“Ravensdown saw strong revenue growth in the past financial year and delivered a sizeable profit to return to its shareholders for the 35th consecutive year since farmers created their co-operative. Investment in our stores and manufacturing infrastructure is paying off, sales in Australia increased by 16% and all our NZ business units are making a profit,” said Bill McLeod, Chairman at Ravensdown.

“We supplied 1.56 million tonnes of fertiliser to farmers in the year which is marginally up on last year. Fertiliser revenues were up due to the highly volatile world prices for products such as urea. The profits from urea were constrained as Ravensdown held the price at a constant $798 per tonne for nine months of the financial year,” added Bill.

Contained within the profit number is Ravensdown’s pending insurance payout of $10.9 million for earthquake damage to the Hornby manufacturing plant. In addition to this, Ravensdown has received $3.6 million from insurers to carry out urgent earthquake-related repairs.

“Given the size and significance of a farm’s investment in its soil fertility, it was no surprise to see our cutting-edge laboratory ARL process record test numbers. These test results underpin our advice and drive accurate nutrient management planning. When combined with Ravensdown’s precise spreading technologies and patented eco-n to help limit nitrate leaching, farmers have proven ways to raise production and reduce their environmental footprint,” concluded Bill.

Australian performance

While revenues, tonnages ordered and customer numbers are growing in Australia, some quality issues related to fertiliser supply and poor farm returns meant that the Australian business made a loss of $1.8 million. There are specific steps being taken to address that localised Australian quality issue.

“This is only our fourth year of Australian operations and to date these farmer-owned operations have been funded by Australian shareholders’ equity. Because our business is about scale efficiencies and we’re seeing more customer numbers and tonnages being ordered, the prospect for profitable growth is strong,” said Bill.

Investing in logistics and manufacturing

“Ravensdown continues to invest in its manufacturing to bring greater efficiencies to bear. We invested $40.5 million of capital of which a large portion was spent on the three production plants Awatoto near Napier, Hornby in Christchurch and Ravensbourne in Dunedin. Major projects were the replacement absorption towers in Awatoto and a maintenance programme for each site’s turbines which turn the steam generated by the manufacturing process into electricity,” added Bill.

“Our supply teams are importing nutrients and minerals from around the world and our new shipping joint venture is both profitable and providing greater control and flexibility. Our physical and chemical testing regimes have been tightened. We have been rationalising our suppliers and selecting those who can meet our detailed specifications. New global capacity for DAP is coming on-stream in Morocco and Saudi Arabia and for urea in Qatar and Algeria. We continue to negotiate with multiple suppliers to secure value for shareholders.”

Technology to target smarter farming trend

Through in-house development and acquisition of businesses such as C-DAX, Ravensdown is developing technology to target the need for ‘precision agriculture.’ “Information is at the heart of modern farming,” said Bill. “The farm’s data can seamlessly flow from soil tests into the nutrient management plan, into the precision ground and air spreaders and then back through proof-of-placement maps into an online tool that graphically shows progress and areas for improvement. When feed wedges can be managed with actual measurement data from software and devices like those made by C-DAX, Kiwi farmers are going to have access to innovative information systems which will be the envy of the world.”

Broader range of inputs at competitive prices

For the past five years, Ravensdown has used its direct-to-farmer business model to increase its co-operatively-owned range of inputs in order for farmers to increase their outputs. For example, it is the third largest drench provider in New Zealand and is working hard to keep prices competitive in that industry. “Our animal health, agrichemical and nutrition business units stand on their own feet financially. It’s early days for our strategic alliance with Cropmark to supply seeds, but shareholders have been able to easily combine their order for fertiliser and agchem with an order for some high-performing cultivars such as Ultra.”

Greater access for more farmers

Ravensdown’s aerial spreading subsidiary, AeroWork, now has a fleet of 20 aircraft and a team of 67 employees. “It has a Civil Aviation Authority accredited workshop in Wanganui so the fleet is extremely well-maintained,” continued Bill. “The autumn bottleneck due to wet weather caused some frustration. While there’s little that can be done about the weather, we have created new roles of AeroWork area co-ordinators who will liaise with pilots, farmers, fertiliser stores, loaders and transporters.”

“Maintaining access to quality fertiliser is a key service for us. We opened up two new large stores in Balclutha in the South and Mata in the North. We also see continued interest in leasing silos for convenient on-farm access. We have also installed 22 new “fertigation” systems for those irrigated farms who can mix their fertiliser on farm to save transport costs.”

These are preliminary results only. Full results will be published and distributed prior to the Ravensdown Annual General Meeting on 25 September.

Ravensdown is the largest Australasian fertiliser co-operative providing farmers with the tools, advice and inputs to raise their production and reduce environmental footprint.

ENDS

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