Beef producer Australian Agricultural Company (AACo) does not expect the live cattle trade to Indonesia to resume quickly but is still anticipating a profitable year.
AACo on Monday booked a net loss for the six months to June 30 of $12.57 million, compared to a loss of $12.2 million in the prior corresponding period.
The result included an $8.2 million writedown on the value of AACo’s northern cattle herd, after the federal government’s intervention in the live cattle trade. It also included $6.8 million in impairment and closure costs and operating losses from the now-closed Chefs Partner business.
But AACo maintained its full year guidance for EBITDA (earnings before interest, tax, depreciation and amortisation) in a range of $50 million to $60 million.
AACo chief executive David Farley said AACo expected a profitable full year result. The federal government’s temporary suspension of the export of live cattle to Indonesia had a substantial effect on the cattle industry, he said.
The financial impact on AACo might be contained if exports resume quickly, but Mr Farley was not confident that exports would restart in early August, because “Canberra bureaucracy” was getting in the way.
No Australian or global exporter of live cattle to Indonesia had been granted or approved an export licence since the ban was lifted on July 6. Mr Farley said shipping firms are now assessing whether to send ships to Australia that may not have any cattle to pick up and that cattle truckers and feed suppliers need to rebuild staff numbers.
“I think between now and Christmas, (export) numbers will be limited. We will be operating on a trickle trade, not a normal trade that we’ve had in the past,” Mr Farley said.
The federal government suspended live cattle exports to Indonesia in June, after an ABC TV’s Four Corners’ report exposed inhumane slaughtering of cattle in some Indonesian abattoirs.
AACo said it had completed 50 per cent of its live export program before the suspension and had forward sales at pre-ban prices awaiting shipment.
However, there was a risk that cattle earmarked for export could grow beyond the required weight. But Mr Farley said if the export trade did restart quickly, AACo’s northern cattle herd could regain some lost value.
World beef prices had remained strong but the disruptions to Indonesian live exports and a subsequent oversupply to alternative markets had caused prices to drop.
AACo also said on Monday that it was well progressed in its feasibility study for a proposed meat processing facility near Darwin.
The facility, construction of which is expected to start before the end of 2011, with operations to begin about 12 months later, will have capacity of around 200,000 head of cattle per year.
Mr Farley said the company is now halfway into a three-year improvement program. Herd numbers had improved dramatically and good seasonal conditions had resulted in great weight gain fertility amongst cattle.
At the close of trade, shares in AACo were two cents lower at $1.39 on Monday.
AAP
