“It was a good sound year, not startling and not bad,” chairman Laurie Margrain said.
Open Country lifted revenues to $908.3 million in the year ended September 30 from $635m in the 14-month period ending July 31, 2013, and earnings before interest and tax (Ebit) were $35.19m, up from $23.43m.
So the gain in revenues was 42% and earnings 50% while the Ebit margin stayed round the 3.7% to 3.8% level.
The bottom line was helped by foreign exchange gains, leading to finance income exceeding costs, including interest on borrowings, by $6.3m.
The after-tax profit was also a 50% gain to $29.8m from $18.15m.
Open Country, the country’s second biggest dairy processor, changed its balance date to fit in with the wider Talleys Group, which owns 69% of the shares.
That change also affected the operating cashflow, which was an outflow of $11m compared to positive flow earlier of $40m. The August and September months were a busy processing period in which inventories were being built-up.
Dairy exporting was a volatile and difficult market, Margrain said, and the group had more product to sell this year with full production from the expanded factory in Southland.
“It was a good sound year, not startling and not bad.”
Laurie Margrain
Open Country Dairy
It was too early to say how trading would be for the year but Open Country would be competitive in its payout, he said.
With the fall in dairy prices, its latest forecast was for at $4.70 to $4.90/kg MS, down from last year’s $8.41 figure.
Open Country manufactures cheese as a well as a range of skim and whole milk powders for about 50 international markets.
It operates three plants, Waharoa in Waikato, Wanganui, and Southland. Expanded capacity at Wanganui would be brought into production in August, Margrain said.
The group works its plants hard, with a focus on efficiencies and tight costs. The cost savings even extend to having borrowings turned over on a one-year basis to benefit from lower bank fees.
At balance date, Open Country had total assets of $533.8m up from $444.6m in July 2013. Liabilities of $249.4m included $129m of borrowings. The equity ratio was 53%.
The ratio of borrowings was conservative and would have been lower still had the balance date remained at July 31, with borrowing used to finance the new season working capital.
Talleys Group increased its shareholding last year, from 55%, buying some of the Olam shareholding as well as others in a partial takeover offer. Olam now owned 15% and was also a major customer, buying $145m of product during the year.
No dividend was paid to shareholders from the annual profits, with the money going back into the business.
