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BEEF producer Australian Agricultural Company (AAco) has posted a PBT loss of $18.5 million for the six months to June 30.
It includes the closure of its poor performing business Chefs Partner at a cost of $6.8 million and the write down valuation effects of the Indonesian live cattle intervention ban totaling $8.2 million.
Despite the hurdles facing the company, CEO David Farley says momentum was well established in its business turnaround program.
“The company was forced to deal with serious challenges during the period, especially from summer floods and changes to government invention policy into the live cattle exports to Indonesia,” he says.
“We’re now 18 months into the 36-month turnaround program, the business continues to realign in front of the new strategy. Management are focused and motivated. The operating cost structure and herd profile continues to improve while the revised business strategy has been further embedded into the operations and culture of the business.”
Farley says the company also completed a $67 million equity placement during the period.
“The capital provides the company with enhanced financial flexibility to pursue growth opportunities, including various vertical integration options and the proposed meat processing facility near Darwin in the Northern Territory,” he says.
“World beef prices have remained generally strong, although the disruptions to Indonesian live exports and the subsequent oversupply to alternative markets did have an impact on prices. This government intervention adjustment is unlikely to correct in the coming months.”
AAco welcomed the recent decision by the Federal Government to remove the suspension on live cattle exports to Indonesia and also the Indonesian Government’s decision to issue import permits for 180,000 head of Australian cattle in the third quarter.
However the company remains dubious the export of Australian cattle will re-commence on time and is working with the Government and industry to ensure full export numbers resume.
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