Farm co-op on lookout for partners
The boss of one of New Zealand's largest farmer co-operatives says the industry is ripe for consolidation, hinting at a tie-up with Hastings-based Farmlands, as it revealed record profits.
Combined Rural Traders operates 31 retail outlets across the South Island and provides its 26,000 shareholders with charge cards which give discounts in more than 4000 retail outlets.
Yesterday, the 49-year-old group revealed a $200 million rise in sales in the year till March 31, to $1.3 billion.
Profits before tax rose 55 per cent to $13.15m and CRT will return $9.75m to shareholders.
CRT chief executive Brent Esler said CRT drew strength from group buying power, and believed there was significant scope for consolidation among the farm co- operatives. It was "constantly" in talks to discuss and promote the benefits or mergers with similar organisations.
"We're very, very confidently, actively promoting opportunities for consolidation," he said.
"Ultimately a farm buying group like CRT needs scale to have influence in the market and without influence we haven't really got a purpose."
Esler would not discuss who talks were taking place with, but said the organisation "maintains good relationships" with Farmlands.
CRT's turnover has more than doubled since 2008, with much of the growth driven by its fuel business, which includes supplying the 85 independently owned Challenge fuel stations.
Esler admitted stronger commodity prices were a key factor behind its increased sales.
"Ultimately it's what happens to the stuff going out the [farm] gate that determines their ability to spend with the likes of us, more than anything we can influence."
General spending had shown a measured increase, while its real estate business had returned to growth after "two years in the doldrums, in the worst market conditions anyone's ever seen".
Taranaki Daily News