Aussie cattle sales and meat production company Australian Agricultural Company Ltd (ASX: AAC) (AACo) publicly filed its full-year results with the ASX today showing revenue of $379.7 million from beef and cattle sales.
Established in the early 1800’s, AACo is Australia’s largest cattle and beef producer, with its farms and properties covering around 1% of Australia’s landmass.
AACo’s revenue of $379.7 million in 2018 compares with revenue of $446.7 million in 2017. Furthermore, AACo reported a loss of $102.6 million from its operations, down from a profit of $71.6 million last year. However, it included one-off impairments.
“Fundamentally, AACo is a strong, branded business with an established presence in high potential, high-value markets, supported by a portfolio of world-class assets,” CEO Hugh Killen said.
“However, recent financial performance has been weak due to a range of factors. We need to create a simpler, more productive and more profit focused AACo to deliver on the Company’s potential.”
The company pointed to increased competition, reduced volumes and increasing input costs as the factors behind its subdued performance. However, it said Luxury/Prestige brands of beef were seeing higher prices per kilo.
Livingstone Set To Shut
With $74.9 million in impairments, AACo announced “decisive action” to stymie losses from its Livingstone Beef operation before the end of the first half of its 2019 financial year. Livingstone Beef is a processing facility just south of Darwin.
AACo said it will suspend operations at Livingstone following repeated losses. This will allow it to simplify and improve the company’s overall financial position and maintain ownership of the facility should a recovery in the market take place.
“In the right market environment, and with the right operating model, Livingstone Beef can be a profitable operation with significant strategic value,” AACo said.
Grass No Greener On The Other Side
Looking ahead Mr Killen said conditions remain challenging, so its operational focus will be lowering costs and trying to strengthen its position as a provider of the highest quality beef.
“Over the next 12 months, we will be particularly focused on maintaining our robust balance sheet and prudent debt coverage ratios and optimising our supply chain,” Killen added.
Over the past year, the AACo share price has fallen from over $1.80 to around $1.13, according to Google Finance.
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