The Australian Agricultural Company (AACo) says its FY23 results including a 14 per cent increase in total revenue and 35 per cent rise in operating profit was driven by brand supported price increases in all major markets.
Snapshot
- Operating profit: $67.4 million vs $49.9 million;
- operating profit margin: 21.5%, a rise of 3.4% on pcp;
- total revenue: up 14% to $313.4m vs $276.1m in FY22;
- Statutory Net Profit After Tax (NPAT): $4.6m vs $136.9m pcp; and
- EBITDA: $49.1m vs $228.6m pcp.
AACo managing director and CEO David Harris said the positive results were the result of adhering to its five strategic pillars including delivering full potential from brands.
Its brands Westholme and Darling Downs led a 17 per cent increase in Wagyu meat sales price on FY22, also a key driver in the uplift of prices and 18 per cent increase in meat ales to $245 million.
Regarding its NPAT and EBITDA results, Harris explained AACo’s statutory reporting requires unrealised value of the herd at current market rates be included.
Harris told the investor call: “Our statutory net profit after tax is $4.6 million. This number is impacted by reduced cattle prices, because the accounting standards require us to include the unrealised gains or losses of our herd. It’s not an indication of our operating performance.
“The Australian cattle market softened during the period, creating an unrealised loss and impacting our statutory figure by around $112m.
“Operating Profit and Operating Cashflow give the most accurate representation of our performance each year. And our operating profit result today is one of the strongest signs to date that our strategy is having success. The strategy is built around selling branded beef into global markets. It decouples our operating position from the fluctuations of the cattle market. And this year you can see that while cattle prices are falling, our operating profit remains strong.”
He added that by working closely with distributors and chefs to better understand its customers, the company has been able to maximise our performance in this period.
“Branded meat sales growth of 22 per cent in the key market of North America shows that our hard work and investments made in the previous years in this region are paying off.
“We’ve achieved increased prices across our markets, which is a direct result of our branded beef program,” Harris said.
In its Asia business, there was 13 per cent revenue growth, with investment in digital to expand consumer reach and engagement, and a major in-store marketing campaign in Korea for the Darling Downs label.
Targeting high-end chefs and restaurants in Australia saw 13 per cent revenue growth on home soil.
Its presence in Europe/Middle East increased that region’s revenue by 43 per cent as the company embarked on an expansion campaign for the Westholme label.
The company’s pastoral properties increased in value by $294.2 million, bumping net assets to $1.6 billion.
On the sustainability front, AACo finished its asparagopsis trial with SeaForest, and converted 388 (62 per cent) of its bores to solar. It expects to have all on solar in 2024. The work on developing a satellite tool that can monitor pasture availability and its Landscape Carbon project are ongoing.
Harris talked about the “extraordinary” people in the company.
“I am passionate about continuing to build on our strong culture and to unlock more value by working as a team focused on results, safety, and our value,” he said.
Women account for 40 per cent of leadership roles while a focus on safety and engagement metrics saw a 37 per cent drop in lost time injury rates and 21 per cent decrease in the severity of injuries.
Harris said an exceptional wet season with strong pasture growth is expected to result in an increase of meat produced, which will help offset increasing input costs from global inflationary pressures.
