Ravensdown cracks $1 billion FY sales despite slim margins

BUSINESSDESK: Ravensdown Fertiliser Co-operative, which supplies close to half the country's agricultural fertiliser, racked up more than $1 billion in sales in its latest financial year, even as it absorbed volatile international urea prices that kept its margins thin.

Operating profit was $51.8 million in the 12 months ended May 31, down from a record $71.6 million a year earlier, the Christchurch-based cooperative says. That came as revenue climbed to $1.07 billion from $933.2 million a year earlier.

The co-operative has to balance bottom line profit to be distributed at the end of the year through rebates and share issues and what it charges for fertiliser, as its shareholders are also its customers.

Chief executive Rodney Green told BusinessDesk the reason behind the fall in operating profit came from Ravensdown holding its prices as it contended with international urea prices that fluctuated by as much as $US100 a tonne.

For nine months of the financial year, the co-operative held prices at a constant $798 per tonne.

"Our margins got down close to zero around December, January, February," Mr Green said. "If we had sold at a margin, profit could have been $5-$10 million higher, but we're comfortable with the number."

Mr Green departs the co-operative at the end of the year, having spent 16 years in charge of the fertiliser firm. He will be replaced by Ngai Tahu Holdings boss Greg Campbell.

Ravensdown plans to distribute $53.5 million to shareholders, representing a total of $40.48 per tonne of fertiliser purchased. That is made up of a rebate of $15.10 per tonne, plus a bonus share issue of 17 shares per tonne valued at $25.38.

Last year the co-operative declared a $57 million distribution through a $15.10 per tonne cash rebate and a bonus share issue of 18 shares a tonne, valued at $26.86.

Ravensdown increased its supply of fertiliser to 1.56 million tonnes from 1.49 million tonnes in the previous financial year.

All of the company's New Zealand units turned a profit in the financial year, though the Australian business made a loss of $1.8 million due to fertiliser supply and poor farm returns across the Tasman.

The company expects to receive a $10.9 million insurance payout on its damaged Hornby manufacturing plant and has already received $3.6 million to make urgent repairs.

Ravensdown increased its total assets by $83.6 million to $869.8 million as at May 31.

The full result will be published at Ravensdown's annual meeting on September 25.