THE nation's largest beef cattle group Australian Agricultural Co (AACo) has reported a first half loss of $30.261 million, but expects to see a return to profitability in the second half of the calendar year 2009.
The net loss for the six months ended June 30 was was worse than the loss of $2.164 million recorded in the previous corresponding period.
Shares in the company fell by 3 cents on Tuesday morning, to $1.405, after release of the financial statements.
AACo said its result reflected the severe drought and flooding, as well as delays in the sale of cattle due to poor prices and difficult conditions on most of its properties.
Chairman Stephen Lonie has told the ASX that the outlook for the second half was for better business conditions and an improvement in financial performance.
It's hard to blame the execs for AACo's misery, says ELIZABETH KNIGHT, in a comment on Fairfax Media's Business Day on Tuesday. She says:
The new controlling shareholder in Australia’s biggest property owner, Australian Agricultural Company, Malaysia’s IFFCO/Felda, cemented its authority by getting rid of the incumbent chief executive, Stephen Toms, and chief operating officer David Connolly.
The board that IFFCO voted to put in place a few months back made this decision. It has seen fit to find a new management team and until then non-executive chairman Stephen Lonie, will take up executive duties to fill the breach.
Governance of this company has been riddled with politics and uncertainty for years - generally the control scales were tipped by the largest shareholder, which until earlier this year was Elders.
At a shareholder meeting held in June there were no less than three board team tickets put before shareholders - two of which had overlapping candidates.
But despite valiant attempts by each of the factions to mount shareholder and publicity campaigns - the ticket supported by the new 19.9 per cent shareholder got over the line.
The IFFCO/Felda-led board is looking for a new management persective. This is normally just polite and legally acceptable corporate speak for "management hasn’t performed and we are getting rid of them’’.
On that basis we should see some evidence of the management’s mistakes contained in the profit numbers released this morning.
At first glance a loss of $30 million for the six months to June 30 would justify any kind of sacking. And sure maybe these men made some big mistakes but the company’s statement doesn’t mention any.
The following all affected the profit:
- A one in 90-year drought across the Barkly Tableland resulting in 100,000 cattle in 2008 being either transferred or sold early.
- A one in 30-year flood in early 2009 making it difficult to rebuild the herd from the 2008 drought.
- Poor cattle prices during the period. Incidentally prices have since improved.
- A loss of revenue from properties that were sold.
- Additional one-off costs included flood related equipment damage and a provision for a potential liability related to a sub-lease taken by failed MIS group, Great Southern.
Still, the sale of the properties allowed AACo to achieve a positive cash flow, pay down some debt and avoid an equity raising.
The management could be lacking but it’s hard to judge given the difficult environment in which it has been operating.
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