Ravensdown drops net debt

TIM CRONSHAW
Last updated 18:24 06/08/2014
Ravensdown
STACY SQUIRES/Fairfax NZ

SUNNY DAYS: Ravensdown has dropped net debt for the year ending May 2014.

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Fertiliser co-operative Ravensdown has strengthened its balance sheet with the lowest debt levels in a decade.

Net debt fell $200 million to $49m for the year ending May, assisted by shedding unwanted Australian operations, to push the equity ratio from 49 per cent the last financial year to 65 per cent. Profit before tax and rebate from its operations leapt to $73m from $28m.

Its trading profit before rebate and tax of $46m was up from $6m the last financial year and its operating cashflow was a record $185m.

Ravensdown chairman, John Henderson said the result had placed Ravensdown in a strong position with its better balance sheet and profitability. 

"Because of the actions taken since 2012-13 as part of a new strategy, the cash, debt and profit positions have been significantly improved.

''On top of this strengthening balance sheet, we are transitioning to a more flexible forex (foreign exchange) policy which we anticipate will make a positive contribution to our current year's performance."The co-operative announced a return to shareholders of $37.38 a tonne made up of $15 rebate and a fully imputed bonus share issue worth $22.38.

This compares with fertiliser rival Ballance Agri-Nutrient's record $78.9m distribution of a rebate averaging $60.83/t on fertiliser purchases, and a fully imputed dividend of 10 cents a share worth $4.17/t. Ballance's result was $89.5m, including one-off costs after closing a Whangarei plant, its revenues were a record $921m and its equity ratio sits at 70.9 per cent.

Ravensdown has shifted its trading focus to New Zealand and is  no longer trading in Australia. The co-operative said the costs associated with exiting Australia impacted its pre-rebate and tax $46m trading profit.Henderson said the Ravensdown team had worked hard to ensure key fertilisers were available during peak demand and supplying products and services at competitive prices.  

Chief executive Greg Campbell said the New Zealand business delivered improved inventory, good cost control, reduced debt and better profitability which placed it in a strong position to deliver more improvement over this year.

"Increasing farm production and the subsequent need to replace soil nutrients resulted in rising fertiliser requirements and growing confidence. New Zealand tonnages rose 7 per cent. Services that help farmers with their nutrient stewardship, for example our award-winning Smart Maps tool and new environmental consultancy arm, are also in high demand.''

Henderson said Ravensdown was building momentum from investment in operations and a stronger balance sheet.

Ravensdown will outline plans to reinvest in the core business at its annual meeting  in Marton on September 15.

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