On 20 November 2018, Australian Agricultural Company Limited (ASX: AAC) released its half-year results to 30 September 2018 reporting a positive underlying operating result despite ongoing challenging market conditions. Following this release, the share price of the company increased by 1.215 percent as on 20 November 2018.
In the first half of FY 2019, the company earned a revenue of $219.2 Mn which is an increase of 11.1 percent as compared to the corresponding previous period. The underlying meat revenue of the company increased by 2.3 percent in H1 FY 2019. The operating profit of the company increased by $18 million to $24.8 million in H1 FY19 as compared to the corresponding previous period. The Net operating cash flow of the company increased to $29.6 Mn in H1 2019 from $47.5 Mn outflows in the corresponding previous period. As at 30 September 2018, the company was having Gearing ratio of 26.8 percent which is within the target range of 20–35 percent. In the first half of the 2019 financial year, Luxury/Prestige beef average pricing per kilogram declined due to higher volumes and macro factors. The Cattle expenses increased from $55.6 million in H1FY18 to $85.9 million in H1FY19 as a result of extreme seasonal conditions.
According to the company’s MD/CEO Mr. Hugh Killen, the positive underlying result, despite the current headwinds, validated the Company’s strategy and highlighted the benefits of initiatives that have been implemented during the period. Mr. Hugh Killen further added that the company is transforming itself into a simpler, more efficient and sustainable organization, and, in the process, it is establishing itself as one of the world’s leading producers of premium branded beef.
During the period, the company took a decision to suspend operations at the Livingstone Beef processing facility, and it also suspended the 1824 brand, both of these decisions had a positive effect on the operating profit of the company. During the first half of FY 2019, the company successfully launched the Westholme brand in Dubai and reviewed its supply chain planning processes to identify and implement cost efficiency initiatives. After the successful launch in Dubai, the company is planning for expansion into new and larger markets, and it is looking forward to updating the market on its progress in due course.
In the last six months, the share price of the company increased by 9.29 percent as on 19 November 2018. AAC’s shares traded at $1.250 with a market capitalization of $744.42 million as on 20 November 2018 (AEST 4:00 PM).
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