The amount returned to them would be $44 million overall, out of the operating profit (before tax and rebate) of $62m for the fertiliser co-operative in the year ended May 31, and added to the millions of dollars effectively returned though lower fertiliser pricing during the year, chief executive Greg Campbell said.
Ravensdown would retain $10m of profit after tax and rebate to invest further in the business.
That was different to last year when the directors paid out about $55m in rebates after making an operating profit of $46m. This year’s rebate was $41/tonne compared to last year’s $50/tonne.
“We’ve got good momentum in the business, we’re keeping retained earnings to invest for the long term and we’re able to give the cash support to farmers when they need it,” Campbell said.
Over the year Ravensdown had led general price reductions four times and capped its spring superphosphate prices, chairman John Henderson said.
There’s been a lot of really hard work for three or four years to get where we are now.”
John Henderson
Ravensdown
For urea and superphosphate, those price initiatives were worth more than $60m on an annualised basis for NZ farming.
Ravensdown had outperformed the sector in both rebate and price reductions, he said.
The co-operative finished the financial year with no net debt and an equity ratio of 84% of total assets. The ratio would still be at 75% after the rebate payment was completed.
That compared with the equity ratio of 45% and year-end debt of $355m in 2012, about the time Campbell became chief executive.
“There’s been a lot of really hard work for three or four years to get where we are now,” Henderson said.
“The financials are strong but on every metric of the business we’re really pleased.”
Total turnover was $660m, down from $716m a year earlier, with steady volumes of fertiliser sales at lower prices.
The co-operative had been diversifying into other products, increasing the turnover of agri-chemicals and seeds as well as putting more focus on technology services to shareholders, such as whole-farm soil testing, custom-blended formulations and improved mapping capability.
It was also doing more environmental consultancy work for shareholders. The co-op was careful to ensure services were not priced too high to inhibit demand, Campbell said.
The outlook was for further favourable pricing for farmers with new supply coming on stream for all the major fertiliser groups – nitrogen, potassium, phosphate and sulphur – though demand was quite subdued. That would put pressure on prices of both commodities and finished products.
In that environment Ravensdown had bought supply well and had not waited to pass the benefits on.
“We did that a lot sooner than we used to,” Campbell said.
The operating cashflow was $106m and that had enabled spending on infrastructure and research and development without significant borrowing or extra capital requirements.
More than $33m was spent on infrastructure in the latest year, including high-precision blending machinery.
In June Ravensdown opened a new precision blending plant in Christchurch. Its successful start-up had encouraged the board to proceed with a similar facility in a revamp at the New Plymouth manufacturing site over the next couple of years.
The final $20 a tonne rebate would also be paid in cash, except for customers who were not fully paid-up shareholders. That group would be paid $10 in cash and $10 in new shares.
