Despite Tough Climate Conditions, Ruralco Beats Estimates

  • Nov 13, 2018 AEDT
  • Team Kalkine
Despite Tough Climate Conditions, Ruralco Beats Estimates

Ruralco has beaten estimates despite the drought and announced post-tax profit to $28.8 million, a 10 percent increase in it for the full year ending September 30, 2018. It will pay a fully franked dividend of 6 cents per share and the underlying earnings per share increased to 27.5 cents by up by 0.3 percent.

Travis Dillon chief executive tells the market on November 13, 2018 morning "That after the difficult seasonal conditions, the feat that the company has achieved in terms of profit growth has confirmed the sustainability of Ruralco's business model". Company’s three strategic priorities: Integration, Investment and Innovation deliver diversification in Ruralco’s earnings and provide a platform for growth. The drought this year has reinforced and tested the success of this strategic focus.

With analyst’s expectation of $1.88 billion, revenue for the year is up to $1.9 billion up by 5 percent. With analysts expecting $67 million, underlying earnings are up 7 percent to $70.1 million. Increased scale in Water Services has delivered 63% growth in underlying EBITDA, with water gross profit now representing 22% of total Ruralco gross profit. There has been significant improvement in operating cash inflow to $34.6 million compared to increase of $20.4 million or 144% in the prior corresponding period.

Declines in Livestock Agency gross profit in Rural Services was offset by, resilient Rural Supplies result and excellent cost control. The company has 10 new points of presence, filling strategic footprint gaps in Rural Supplies, Real Estate and Water Services including 2 new greenfield sites. The company has made first cash investments in AgTech start-ups to deliver innovation to their customers.

For further results the company did not give specific guidance but quoted that "what supports the positive outlook for the business is the continued resilience in the wool markets and sheep and current stable cattle prices, with recent spring rainfall, it remains cautious about short-term seasonal conditions”.

Ruralco announced it has made a strategic investment in Toowoomba-based Agtech startup; Data Farming. In what has been a challenging year for the customers and many parts of the business, the diversification of company’s footprint and activities have eased the impact of mixed seasonal conditions.

Ruralco Holdings Limited (ASX: RHL) is trading at a market price of $3.510 and has seen a performance change of 0.69% over the past 12 months.


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