Christchurch-based fertiliser co-op reports $5.4m loss

Otago Daily Times

2 days ago

Christchurch-based Ravensdown has reported a loss of $5.4 million after tax and one-off costs for the year ending May.
The fertiliser co-operative's result follows a profit after tax of $2.8m a year ago.
The costly closure of a Dunedin fertiliser manufacturing was among the business challenges. Closing the site, off-loading five lime quarries and the sale of assets from its agritech subsidiary C-Dax in a bid to reshape the business resulted in impairments of $9m.
Fertiliser manufacturing officially ended at the Ravensbourne site earlier this year with the loss of about 30 jobs.
The site will remain a port store and distribution centre with manufacturing operations restricted to Napier and Christchurch.
Before impairments, tax and one-off adjustments, Ravensdown said it delivered an operating profit of $13m.
Plateauing revenue of $764m and volumes up 71,000 tonnes on the previous financial year to 962,000 tonnes resulted in lower margins.
Ravensdown was unable to deliver farmer shareholders a rebate as it worked to keep fertiliser prices down for them.
Chief executive Garry Diack said in a statement the co-op had worked hard again to deliver competitive pricing throughout the year and focus on keeping prices lower while customers emerged from the economic downturn.
"The co-operative has absorbed increasing international fertiliser prices and rising input costs to delay passing them on to customers, even as our own margins have come under pressure. Impairments of $9m from the closure of manufacturing in Dunedin, the divestment of five lime assets, and the sale of C-Dax are an outcome of our strategy to size the business to meet the market."
Chairman Bruce Wills said Ravensdown's underlying performance continued to ensure a stable funding base resulting in an equity ratio lift to 80%, up 1% on the previous financial year.
The co-operative again reported positive inventory and debt management, building on improvements achieved in the previous two years. Inventories at the year-end reduced further by $22m to $128m with debt reduced by 67% to $26m.
However, a third year of difficult trading did not allow payment of a shareholder rebate, he said.
"In this environment it has been prudent to continue our conservative approach to capital expenditure and conserve funds. Although fair pricing was at the expense of a rebate, the business was able to leverage the strength of its balance sheet to ensure we're well positioned for any market upturn."
Mr Diack said improved fertiliser sales could be expected in spring in line with the dairy sector's better fortunes and the beginning of an upturn in the red meat sector.
Ravensdown said its total manufacturing capacity had been adjusted to meet future market volume requirements with the closing of Dunedin manufacturing earlier this year.
Over the past year, capital work had been completed at Ravensdown's two manufacturing sites in Napier and Christchurch, shoring up total manufacturing capability to about 550,000 tonnes a year.
Sales of New Zealand-manufactured product increased 17% (382,000 tonnes) and a further lift is expected during the 2026 financial year.
Mr Diack said the co-op was sourcing and diversifying its supply of raw materials for local manufacturing to suit pastoral farming systems.
"The co-operative's impairments over this past financial year reflect that we are a business adapting to changing market conditions. While the closure of manufacturing in Dunedin has had a significant impact on our financial result this year, ongoing we will realise the benefit of reduced operating and capital maintenance costs."
He said Ravensdown had put together a targeted programme of projects to improve its operational efficiency and support customers to "do more with less" nutrients.
Despite Ravensdown's outlook for increased volumes and profitability as the rural economy returned to a more stable period, it sees the global economy being more volatile.
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